Having your car become repossessed is very stressful. But what happens to the insurance on your vehicle when this happens? Is it safe to cancel your old insurance policy after your vehicle has been repossessed? Here’s what you should know about car insurance after your car has been repossessed.
Full Insurance Coverage Until Your Car is Paid Off
If you don’t own your car, the lender will likely require you to keep full insurance on your vehicle until it is completely paid off. If you don’t maintain full coverage on your vehicle, this would be a violation of your agreement. You may be charged more money on your next payment, as lenders are taking a risk by financing your vehicle. Repossessing a vehicle is expensive, so lenders would rather the vehicle be totaled, wrecked or stolen before it is repossessed.
After a Repossession
After a repossession occurs, you want to maintain basic liability coverage on your vehicle. This ensures that you have control over the car insurance policy rather than the lender deciding what you need to pay. It is ideal to maintain insurance on your vehicle until it has been sold.
Will a Repossession Make Insurance Rates Increase?
A repossession is a financial issue rather than a liability issue, so it shouldn’t have an impact on your insurance claim. However, this may not be the case because a repossession will have a negative impact on your credit score. Your credit score has an impact on how much your car insurance is.
If you have more questions about repossession or Illinois auto insurance, please feel free to contact our team at Accurate Insurance today!