Why does my lender require auto insurance?

One of the biggest purchases that you will ever make is when you buy a new or used car. When you are shopping for a car, you may find that they are too expensive to buy in cash. In these situations, you likely will require a loan to finance the purchase of the car. If you do take out a loan, you will have some responsibilities that need to be followed. One important responsibility that you need to comply with is the requirement to carry auto insurance. There are several reasons why your lender will require that you carry insurance at all times. 

Ensures Legal Compliance

One reason why your lender will want you to have auto insurance is that it will ensure that you stay in compliance with the law. All lenders will want you to have a valid license and stay in compliance with the law. Lenders are also aware that states have minimum auto insurance requirements. Because of this, they will want you to have liability insurance coverage at all times.

Protects Collateral

Your lender will also need to make sure that their collateral is properly protected. The lender will need to confirm that you have a full collision and comprehensive coverage policy at all times. This will help to ensure that their collateral is protected in the event of theft, vandalism or another issue that could cause a loss. 

If you need to get auto insurance for your Selden, NY area vehicle, you should speak with XL Brokerage Inc. first. The team at XL Brokerage Inc. can help you to review your loan agreement to figure out what your auto insurance requirements are. This will help to ensure that you have the right coverage for your Selden, NY area vehicle.