If you financed your vehicle, your lender may have given you insurance requirements that are part of your loan agreement. A common requirement is maintaining comprehensive and collision coverage while the loan is open and listing the lender appropriately on the policy.
Why Does My Lender Need to Be on My Insurance?
Until the vehicle loan is paid off, the lender has a financial interest in the car. Your financing agreement may therefore require the lender to be listed as a lienholder or loss payee and may require certain physical-damage coverage.
What Coverage Does a Lender Usually Require?
Requirements vary by lender and loan agreement, but lenders commonly require comprehensive and collision coverage and may place restrictions on the deductibles you choose. Liability coverage alone may satisfy certain legal driving requirements, but it may not satisfy the terms of your auto loan.
Always use the actual requirements supplied by your lender rather than guessing what coverage or deductible they require.
What Is a Declarations Page?
Your auto insurance declarations page is a policy document that summarizes important information about your coverage. Depending on the insurer, it can show the named insured, covered vehicles, policy period, coverages, limits, deductibles, premium information, and lienholder information.
If your lender asks for a declarations page, they are generally trying to verify that the vehicle is insured according to the requirements of your financing agreement.
What Happens If I Don't Maintain the Required Coverage?
If your loan agreement requires certain insurance and you do not maintain it, the lender may have remedies under the financing agreement. One possibility is lender-placed or force-placed insurance. This coverage can be expensive and may primarily protect the lender's financial interest rather than providing the same protection as a policy you selected yourself.
Depending on the contract and circumstances, a lender may also have other remedies. Review your loan agreement and respond promptly to insurance notices from your lender.
What Should I Send Street Smart?
If your lender contacted you, send Street Smart the actual request whenever possible. Helpful information includes:
- The lender's full name and address;
- Your vehicle information and VIN;
- The lender's written insurance requirements;
- Any letter, email, portal notice, or sample document the lender sent you; and
- Your loan or account information if it is required to complete the policy change.
We can review the request, help determine what policy change is needed, and provide updated insurance documentation when available.
Don't Wait Until the Lender Sends Another Notice
Insurance requests from lenders are often easier to resolve when we can see exactly what the lender is asking for. Instead of trying to interpret the request yourself, forward it to Street Smart.
Need to add a lienholder or send your lender a declarations page? Send Street Smart the lender's insurance requirements and we'll help you determine the next step.
Important: This article provides general insurance information and is not legal or lending advice. Coverage requirements vary by lender, financing agreement, insurer, policy, vehicle, and individual circumstances. Your policy terms and loan agreement control.