Does Your Car Insurance Go Down After You Own The Car ?

When paying a car payment to the bank, you have to have insurance on the car. There is no flexibility in this regard. If you fail to maintain collision and comprehensive coverage at any time during the loan term, then the bank has the right to reposess your car even if you are current on payments.

When financing the car

When financing your car, you are required to have full coverge (liability, collision and comprehensive). Collision and comprehensive covers the banks asset for damage and theft so you will have to have these coverages during the term of the loan. Liability insurance is required by most states in the US so you'll likely need this coverage regardless of whether you own the car. The bank's status as the lienholder entitles it to require full coverge. Once you finally make that final payment and receive the title, then you get some flexibility.

What happens once I own the car ?

Once you own the car and have the title , you can change your car insurance coverage to whatever you like. You will still need to keep your liability coverage depending upon your state's laws. You have to consider some things before making any changes. If the car is older and the private party value on Kelly Blue Book is only a few times higher than your deductible, then it might make sense to remove collision coverage or comprehensive coverage if you drive a low risk theft car. If your car still has a private party value many times higher than your deductible, then you should keep full coverage on the vehicle.

Consider your financial condition

You have to consider your financial condition and whether or not you can risk a total loss of your car before you make any changes. You can also raise your deductible to a higher level than the bank would allow when they had the title. This is just one idea on how to lower the cost of car insurance. Don't take excessive financial risk just to save a little money each month in premiums. It may not be worth it if you do get in an accident and your car is damaged or totaled.

Where can I find the best deal on car insurance?

If you are shopping for car insurance or just want to compare rates to your current company, then we suggest that you compare policies and rates from several insurers. We recommend Insureme who allows you to compare several rates from dozens of major, highly rated insurers such as State Farm, Met Life, Allstate, AIG, and more. They also are unique in that they include independent insurance agents in their network. You'll get a few local agents quotes to compare to the major online companies.

This should not be considered financial advice which can only be given by a qualifed financial professional. We suggest you consult with a qualified financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

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