Question

If I have car loan insurance but not an actual insurance policy, will my vehicle be covered if something happens?

My vehicle is currently parked and I won't be driving it for a while. I canceled the insurance policy but I have car loan insurance since it's being financed. Will I be covered if something happens to the car?

Jun 30, 2017 Detroit, MI

Answer
Neil Richardson

Jun 30, 2017

It really will depend on what you mean by "car loan" insurance. If your finance company added comprehensive and collision coverage to your monthly car payment because your insurance policy canceled then you'll likely be covered only for the remaining amount on your loan. This is typically called "forced coverage" since most banks require that you maintain insurance until you pay off the car. If you purchased credit insurance, in case you die or become disabled and can't pay off your car loan, you likely won't be covered for any damage since this type of policy is not intended for that purpose. You would need to check your paperwork or call the provider of that policy to find out the specifics.

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