Reader question:
I bought a new car and financed it through a bank, and wasn’t able to get comprehensive and collision coverage. The bank got the coverage for me. Can they do that?
Kenneth
Great question, Kenneth.
The truth is that they can. It’s something that’s helpful for you when you’re unable to afford the appropriate insurance, especially when having that insurance is a necessary requirement for buying your new car. Many people find that with the high amounts they have to pay for their car note, they’re barely squeezing by. Insurance, especially at the higher rates it comes for new cars with full coverage, can be an impossible need to fulfill.
If you lease or finance a car, the leasing company or bank requires you to have enough coverage on their car to protect their own pockets in case something happens to it. For example, if the car is stolen or totaled, they’re still going to require you to pay the remaining cost, and you may not be able to, which could put them in a bind.
Because of this, the bank has the right to, and will, make sure that you get coverage on your car whether you do it yourself or not. And once they have found that coverage and informed you of it, they can and will expect you to pay the premiums that they acquired for you. Considering that it’s a requirement of the lease, this is something they can do if you do not want to risk losing the car.
Cheers,
Fashun Guadarrama.