Is Insurance On Financed Vehicles Mandatory?I have a question regarding insurance coverage on financed vehicles in the state of California. Is it a requirement that the purchaser of the vehicle maintain full coverage on the vehicle (i.e. comprehensive and collision) during the entire period of the loan?
My son is contemplating purchasing a used truck (with my wife as cosigner), and the quote he got from our insurance company (for a 4 year loan) is more than the cost of the vehicle.
While it's not "law" to have both comprehensive and collision on a financed vehicle, most lenders will require these coverages in order to protect the asset being insured -- in this case, the truck. The lender is trying to keep the chances of a defaulted loan as low as possible. Let's face it: if the truck was in a serious accident and your son was unable to afford to have the vehicle fixed, he might also be more inclined to default on the loan. At least, that is the rationale for the requirement.
As for the high cost of insuring a young male driver, my thought is that it makes more sense for the truck to be in your wife's name, if you want to help your son save some money. If the truck was part of a multi-vehicle policy (your vehicles plus your son's truck), and your son was named as the primary driver on the truck, you might find that the premiums would be a bit lower. It's likely that a large part of the cost is for your son to have his own policy, separate from your coverage.