If your car has been repossessed, you’re likely navigating a stressful financial situation. Among your concerns, car insurance might be on your mind. Many people wonder, does a repo affect car insurance? and how does vehicle repossession impact your auto insurance premiums? Here’s what you need to understand.
Why Full Car Insurance is Usually Required
When you finance or lease a vehicle, you’re typically required to maintain full coverage car insurance. This is because the lender or leasing company technically owns the car until it’s fully paid off. If you fail to make payments, leading to repossession, the lender needs to protect their asset. Should you lapse on your insurance, the lender might impose their own coverage and add the cost to your financial burden.
Keeping Insurance After Repossession: Is It Necessary?
It’s generally advisable to maintain your car insurance even after repossession, at least temporarily. This allows you to control your insurance policy until the situation with the vehicle is completely resolved and the lender sells the car. While the lender might have their own insurance, maintaining your own gives you more control during this transition period.
How Repossession Impacts Future Insurance Rates
A car repossession itself isn’t an insurance claim. It’s a financial issue, not a driving incident, and therefore doesn’t directly cause your current auto insurance rates to increase. However, repossession significantly damages your credit score. Insurance companies often use credit scores to assess risk when calculating premiums. Consequently, while the repo itself isn’t a direct insurance rate hike trigger, the resulting credit score drop can lead to higher insurance premiums when you seek coverage in the future.
Vehicle repossession is undoubtedly a challenging experience. To navigate your car insurance needs effectively, especially after a repossession, speaking with experts is beneficial. For reliable and comprehensive auto insurance advice and policies, contact the professionals at Jack Stone Insurance Agency. Discover more about your options by visiting our auto insurance page.
