Financed car insurance requirements
Lender rules usually requiring comp, collision, and listing the lienholder.
Plain definition
Auto lenders require physical damage coverage—comprehensive and collision—and often maximum deductibles while you owe on the loan. The lender is listed as loss payee to receive claim checks for repairs or total losses affecting collateral.
Why it matters
Dropping comp/collision to save premium can breach your loan contract and trigger forced-placed insurance at higher cost.
Example
You finance a SUV; the bank requires $500 max deductibles and proof of comp/collision before funding. Your dec page lists the lender as loss payee.
Common misunderstanding
The lender’s requirement is separate from state minimum liability—you need both legal liability limits and lender physical damage coverage.
Policy language always controls. This is educational content, not advice. See our disclaimer.