Finance company car insurance requirements are not at all unusual.
These measures are in place so that the financier doesn't lose their investment if you happen to get in an accident before your vehicle is completely paid off.
This makes perfect sense, of course. For that reason, if you owe money on your automobile, you are most likely going to have to purchase comprehensive auto insurance as well as collision coverage.
I always try to get away with having the cheapest insurance I can possibly manage. I look for every possible discount available. Yes, I'm an insurance scrooge! :)
I try to limit myself to the basic liability coverages for bodily injury and property damage.
I also usually go for the highest deductibles possible. This keeps my premiums as low as possible.
Having said all that, it's not that simple when you have a car loan. When it comes to borrowing money for a vehicle, the lender doesn't want to take any chances.
Naturally, most lenders, whether banks, finance companies, or car dealerships, want their risk covered.
If you are going to purchase a car that is more than you can afford to buy outright, be sure to consider the cost of your insurance premiums when considering your budget for your monthly payments.
The lender may also try to get you to pay for additional coverage. There are options that cover your loan payments if something should happen to you. This is not required even if they make it sound like it is. It is worth thinking about though.
The finance company car insurance requirements simply cover the actual value of the car, not the price you happened to pay for it. That can leave you with a real problem if your vehicle is totaled or even seriously mangled.
Be sure to ask about GAP coverage...
There is one important point to note when buying insurance for a financed vehicle where you still owe money on it.
Most insurance coverage only pays for actual value of the car as determined by the insurer at the time of the claim. This can be LESS than what you actually owe. If you have a car debt, it is worth paying the little extra for GAP coverage.
This is especially true if you think you owe more than the Kelley Bluebook value of the car. Gap coverage takes care of the 'gap' between the actual value and the amount you owe so that you aren't further out of pocket.
It would be such a shame to have to be stuck paying the balance on a car you can no longer drive! Ugh! In cases of finance company car insurance, be sure you have enough coverage and all the right types!