Loan Car Insurance

Loan car insurance requires you to carry comprehensive and collision coverages. However, depending on the value of your car, you may not need loan car insurance.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jun 23, 2020

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Here's what you need to know...

  • If you have a loan on your vehicle, you will be required to carry comprehensive and collision coverages
  • Comprehensive coverage pays for damages that are not the result of a collision with another vehicle
  • There are many optional insurance plans available
  • If you do not have a loan on your vehicle, you can decide for yourself if carrying comprehensive and collision insurance is a good choice

Loan car insurance refers to the comprehensive and collision coverage that a lender will require you to have if you owe money on your car loan. This type of coverage is not required by state laws like liability coverage.

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With today’s modern lifestyle, there are many reasons why comprehensive and collision insurance may be needed, even if you do not still owe money on your vehicle. The liability coverage your state requires only pays for damage to the other vehicle, driver,

The liability coverage your state requires only pays for damage to the other vehicle, driver, passengers, and property. It does not pay for any damage to your vehicle.

If the other driver is uninsured, or if the damage is not caused by another person, you will need to have collision or comprehensive if you want your vehicle to be covered.

What is the difference between collision and comprehensive?

If you have a loan, car insurance requirements dictate that you understand the difference between collision and comprehensive insurance coverage.

Basically, collision will be necessary if you cause damage to your own vehicle, or if your car is damaged in a hit and run.

Comprehensive insurance coverage will pay for damage from acts of God like weather, a deer jumping in front of your vehicle, and even damage by vandalism and theft.

Most car insurance companies offer this insurance and give incentives to their customers for taking out this type of policy.

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Will insurance companies payout without loan car insurance?

If you only have liability coverage, you will not receive payments for the damage done to your own vehicle or property.

While the other driver’s liability coverage will kick in some states, other no-fault states require each driver’s insurance to cover their own needs. For this reason, you will also want to consider carrying uninsured driver coverage.

What other types of insurance are there other than loan car insurance?

There are several different types of insurance available:

  • No Fault Insurance – you receive payment regardless of who caused the accident
  • GAP Insurance – will pay the difference in value and loan if your car is totaled
  • Third Party Property Damage or Liability – will pay those whose property is damaged by you
  • Compulsory Third Party Insurance or Bodily Liability – will pay out to those hurt in the accident

How do I find the right loan car insurance?

There is great competition amongst the insurance companies to offer to you the best type of deal whether it is on loan car insurance or any other type of motoring insurance or building insurance.

You can make big savings by checking out their latest deals. Simply add your zip code into our search engine and we will compare the companies for you at no charge and with no obligation.

If it is a new car that you are insuring then insurance providers tend to offer better discounts on the premiums you pay as new cars have a lower risk of mechanical problems than with secondhand cars.

If you have more than one policy with the same insurer you will also benefit from lower premiums that you have to pay.

Finding the best provider for your needs is paramount. You can ask friends, workmates and family for references and recommendations as to which provider to use.

Even with their advice, you should still check out the recommendations more thoroughly for yourself.

Check out their ratings and listings as given by other consumers. Make sure you investigate their offers and deals, too, as what they report may be only the best sellers and the right deal for you may be elsewhere on their site.

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Does everyone need loan car insurance?

No! If your vehicle has a very low Kelly Blue Book value, it may not make sense to pay the collision and comprehensive premiums. Of course, if you still have a lien on the vehicle, you don’t get to make that decision.

Just keep in mind, that when you do pay off the loan you may be able to drop this type of coverage.

Compare premium costs, benefits and companies before committing to getting coverage with any single provider.

The independent insurance rate tool offered on this page is intended to assist you in making an informed, no-pressure decision that is best for you.

Just enter your zip code and receive no cost loan car insurance quotes today!

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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