A co-signer may not necessarily have to be on the insurance policy for the vehicle on which the loan was taken. As a co-signer, it is essential to ensure proper insurance on the car.
If the primary policyholder on the loan does not correctly insure the vehicle, you may be held accountable. Because a lien holder typically requires both comprehensive and collision to be carried on a car with a balance due.
As a co-signer on the loan, you are partly responsible for those who drive the vehicle and the damages that might result from their actions. You have vicarious liability as a co-signer. So if you are not the one to have insurance on the vehicle, make sure that the primary does have the required insurance continually carried on it.
As a co-signer, you may request that the person holding the insurance list you as an additional insured. That way, you are notified of any policy changes or cancellations.
If you have decided to take out full coverage on the financed vehicle to make certain that the car is adequately insured, you can start a car insurance comparison.
— Michelle Megna contributed to this story.
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