Question: Would my auto loan lender be contacted if I make changes to my automobile insurance policy? I believe my insurance company knows about the loan and the lender.
Answer: A lein holder’s interest would be noted on the policy and auto insurance companies would need to notify them of changes. Usually they would know the changes within 7 – 10 days. If you dropped any coverage that they required they would probably contact you and ask to re-instate the coverage. If you don’t they may go ahead and place a forced coverage on your auto. This would probably be an expensive policy and you would be required to pay it. If things get worse, they may even try to repossess the automobile they have security on.
On the other hand, they may not be interested in small changes and the changes that related to your personal circumstances like yearly mileage, home address and maybe adding another driver to the policy. If a financial adviser or a broker arranged the loan for you, you can probably ask them questions and it would not reach to the company. Besides, what is the harm in talking to the company directly if they would find out anyway.
If the size of the loan has been reduced considerably they may be open to negotiations and letting some of the coverage go. For example, if there is very little chance of your auto loan being upside down anymore they may let you drop Gap coverage or increase the deductibles so that you can save money.
Another options is to pay the loan off if it is at all possible and if their car insurance requirements are costly and burdensome. There is no need to put up with high premiums. Furthermore, paying of an auto loan can save you in two ways. You save on vehicle insurance premiums and your don’t pay interest on the loan anymore.