Reader question:

I’m buying a used car. Does my used car insurance coverage have to include things like comprehensive and collision coverage?

Molly

Thank you for asking, Molly.

It really depends on several things. I, for one, a making payments on a piece of junk car that is older than myself, which I naively bought because I liked the way it looks. I’ve wizened up since then. In the meantime, it was an expensive car back before I was born, so even with age it is still in the expensive range for older cars, and I only have liability auto insurance coverage for it, considering that it is worth its weight in scrap metal and I probably pay more for it on insurance every year than I would get if it suddenly combusted. Now, my car dealer ship knows that I only have liability, because asked them, seeing that, regardless of the uselessness of this vehicle, I don’t want it to be repossessed. They didn’t have a problem with it, even though full coverage was required in my contract. I’m not sure if this is because I’ve almost finished paying for it or what, but it definitely couldn’t hurt to ask.

Now, apart from that, let’s get down to where the requirement to get full auto insurance coverage on your used car comes from: the financial institution that gives you the financing for your car. This will always be the one that decides, so whether it is your actual car lot or a bank, the word will come from them. If the financial institution doing the financing is a bank, then you probably have no chance of doing the little dance that I mentioned above. If you are dealer financed, you have a better chance, since some dealers are more lax than others.

If you are unsure as to whether or not you need complete used car insurance coverage, then you need to take a look at the contract you signed when you bought the car in the first place. This should included all of your own responsibilities for taking care of the car, involving subjects such as the warranty upkeep and auto insurance coverage. If the requirement to have full coverage is not in your contract, then your car dealer ship cannot make you get it. However, if you think it isn’t there, make sure you contact them first to make sure you aren’t reading it wrong.

Cheers,

Fashun Guadarrama.