When lease/finance a car part of the agreement to get funding for your car is auto insurance. The reason for this is the entity who has financed your purchase wants a guarantee that in the event the car is destroyed, they will get repaid. The finance company thinks of it in these terms: if you lose the car, then there is no incentive for you to pay them back and their collateral is gone.
So, to cover their tails they require that they be put on the title and listed as a loss payee on your insurance.
If you do not carry enough insurance, it is a breach of the contract you signed. This, in effect, is like missing a car payment. Thus, if you breach the contract by not carrying adequate insurance your car will be repossessed.
.JPG){kind=avatar}
When lease/finance a car part of the agreement to get funding for your car is auto insurance. The reason for this is the entity who has financed your purchase wants a guarantee that in the event the car is destroyed, they will get repaid. The finance company thinks of it in these terms: if you lose the car, then there is no incentive for you to pay them back and their collateral is gone.
So, to cover their tails they require that they be put on the title and listed as a loss payee on your insurance.
If you do not carry enough insurance, it is a breach of the contract you signed. This, in effect, is like missing a car payment. Thus, if you breach the contract by not carrying adequate insurance your car will be repossessed.
I hope this helps.