I have full coverage insurance. My car payments started at $273 per month. Suddenly, my payments started going up. When I called the loan company, they said that they had not received my proof of insurance. My agent at AAA has faxed them my declarations page twice this week, but my new bill is even higher. Is this my fault?
Question
Can a bank add insurance to my loan when I already have insurance?
Agent Answer
This sounds like a processing error. Short of that, I would say that this issue is unfortunately too specific to your policy for me to accurately advise. You’ll need to contact your loan company as well as the insurance company for further help. If it is an error on the part of the company, they should honor your continuing coverage and backdate whatever payment that was made.
Having said that, banks that finance car loans can force the buyer to carry insurance. This is known as collateral protection insurance. This lender-placed insurance is typically added to the payments of drivers who are not carrying adequate insurance coverage.
Good luck clearing this up.