Expert: Richard Hixenbaugh - 7/25/2009

Question
I know this is horrible, but I haven't had car insurance for at least four years now.  I want to buy a new car and I know you have to have insurance before you can drive off with a new car. My question is, do I have to have insurance until the car is paid off? Will the car get taken away if I stop paying insurance after six months?  If so, how does my car get taken away, does the insurance company call the car dealer to let him know?  Thank you for your time.

Answer
Hi Patricia,

Yes it is horrible. When you do not have insurance, you risk the financial future of everyone you pass on the road. If you can not afford to buy and keep insurance you should not be buying a car.

If you do by a car and that car is financed, the finance company will require that you carry full coverage insurance until the car is paid off. If your insurance should lapse the insurance company is required to notify the finance company. If you do not show new proof of insurance, the finance company will purchase insurance for you that is about 4 times more expensive than you could buy and they will add it to your loan and you will pay interest on top of that for the balance of the term of your loan.

I hope this helps
Richard Hixenbaugh