car insu

Can I Cancel Auto Insurance on a Financed Car?

When you finance a car, your lender requires you to have auto insurance coverage to protect the vehicle and their investment in the event of an accident—however, sometimes life changes, and you may want to cancel your insurance coverage on the financed car.

Canceling auto insurance on a financed car can have serious consequences, as the lender’s investment is at risk. Before doing so, it’s essential to understand the requirements set by the lender to ensure that you comply before making any changes to your auto insurance coverage.

How Much Insurance Do Lenders Require?

Lenders require proof of insurance coverage to protect their investment when financing a car. The amount of insurance required by lenders varies, but it typically includes liability insurance and comprehensive coverage. Liability insurance covers injuries or damages you cause to another driver, while comprehensive coverage protects your car from fire, theft, or other damages.

Some lenders may also require collision insurance, which covers damages to your car in an accident. In addition, underinsured/uninsured motorist insurance provides compensation for accidents involving a driver without insurance.

In conclusion, you can’t cancel auto insurance on a financed car without your lender. If you cancel the insurance coverage, you may be putting your assets and the lender’s investment at risk. Therefore, always consider the implications of any changes to your insurance coverage, especially when it comes to a financed car.