Can My Finance Company Add Insurance to My Vehicle?
Your auto finance company can add insurance to your vehicle; read your contract over for details.
As part of your lending agreement, you must keep a full-coverage policy on your vehicle until you satisfy your loan.
If you don’t, the lender can add its own policy or even repossess your car.
Your bank likely tried to contact you before adding the extra insurance to your vehicle. When you first took out your car loan, proof of full-coverage insurance was required, so most likely, you changed insurance companies or let your policy lapse.
It is your insurance company’s responsibility to notify your state’s motor vehicle office and your lender of any policy changes. Once your lender finds out you don’t have coverage, it will try to contact you by phone and mail before adding the extra coverage to your vehicle.
Your Car Payment
If you failed to prove insurance to your lender and it had to apply extra coverage, you most likely noticed this because of an increase in your car payment. Bank-purchased insurance policies are more expensive than policies you can purchase privately, so your payment may increase substantially.
Try to correct the issue as soon as possible, but if your car payment is due, pay it. If you do not pay your car payment, the bank will likely report a late payment to the credit bureaus.
Obtain proof of insurance as soon as possible and forward the proof to your lender. If your insurance company failed to notify your lender of consistent coverage, provide proof of insurance that shows the effective policy dates. If your insurance lapsed, purchase a new policy as soon as possible.
Stop into the bank with your proof of insurance if it is local; otherwise, call your lender for immediate response. Find out if you can fax or email proof of insurance to have the matter handled promptly.
If you find that your insurance company did not not properly notify your lender of consistent coverage, contact your bank in the future whenever there are policy changes and renewals to ensure these are reported.
If you change insurance providers, contact your bank immediately; you can likely fax or drop off your proof of new insurance to avoid a hassle in the future. If your lender tries to contact you, return its phone calls immediately.