Yes, you can have liability insurance on a financed car, but it typically does not meet the requirements set by most lenders. Liability insurance only covers damage or injury caused to others, not the financed vehicle itself. Lenders usually require comprehensive and collision coverage to protect their financial interest in the car.
Keep reading to learn more about liability insurance and accidents. If you or a loved one were hurt in a crash that wasn’t your fault, call our Florida car accident lawyers at (561) 655-1990 today.
What is liability insurance?
Liability insurance is the minimum coverage required under Florida law for drivers. According to Florida Statutes § 324.021, drivers must carry:
- $10,000 for personal injury protection (PIP)
- $10,000 for property damage liability (PDL)
This coverage pays for injuries or damages you cause to others in an accident but does not cover repairs or losses for your own vehicle.
Why liability insurance alone is insufficient for a financed car
When you finance a car, the lender is technically the owner until the loan is paid off. To protect their asset, lenders require borrowers to carry comprehensive and collision coverage in addition to liability insurance. These policies cover:
- Comprehensive: Non-collision-related damages (e.g., theft, vandalism, weather damage)
- Collision: Repairs to your vehicle after an accident, regardless of fault
Failure to meet these requirements can result in the lender purchasing insurance on your behalf (force-placed insurance), which is often far more expensive.
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What happens if you only carry liability insurance on a financed car?
If you only have liability insurance and get into an accident, you will be responsible for repairing or replacing the financed vehicle out of pocket. Additionally, your lender may impose penalties or repossess the car if you fail to meet the insurance requirements outlined in your loan agreement.
How to ensure proper coverage on a financed car
- Review your loan agreement: Check the lender’s specific insurance requirements to ensure compliance.
- Obtain comprehensive and collision insurance: Bundle these with your liability coverage to meet the lender’s standards.
- Regularly update your coverage: Inform your lender of any changes to your insurance policy to avoid disputes.
Why legal guidance matters
If you’re involved in an accident with a financed vehicle or have questions about your insurance obligations, the experienced attorneys at Lytal, Reiter, Smith, Ivey & Fronrath can help. Understanding Florida insurance laws and lender requirements is essential to protect your financial and legal interests.
Get help today
Whether you’re dealing with an accident or need assistance understanding your insurance coverage, contact Lytal, Reiter, Smith, Ivey & Fronrath for a free consultation. We’ll guide you through the process and fight to protect your rights.
