Dealing with repossession of your vehicle can add a ton of stress on your life. With so many financial things up in the air, you’re going to want to cut back on some of the strain.

So, do you need to keep insurance on a repossessed vehicle?

Are You Still Paying for the Vehicle?

If your vehicle is still under lease or you are making car payments on it, insurance is still required. This is because you don’t fully own the vehicle, and your car dealership/ financing company owns part of that vehicle until it’s paid off.

The lender will be the one who repossesses the vehicle and will then sell the vehicle to recoup their losses.

What Do I Do After a Repossession?

If your vehicle has been repossessed by the lender, but your car insurance is still active, then it’s in your best interest to maintain basic liability coverage.

Sometimes a repossession company will insure the vehicles they take, so your coverage may become redundant. Be sure to speak with the repossession company to see if they have insured the vehicle or not.

Will My Insurance Rates Go Up After a Repossession?

A repossession happens due to financial issues, usually because a person didn’t pay their car payment on time. Because this doesn’t have to do with liability issues, your insurance should be fine.

Unfortunately, a repossession will devastate your credit score, a factor that insurance agencies look at to determine your rates. This is because a repossession is classified as a loan default.

Texas is one of the states that look at credit scores to determine insurance rates for customers. A repossession can drop your credit score 100 points and any late payments, collections, and public records will stay on your credit for around 7 years.

If you can, speak with your lender before you miss any payments. Communication is key, and sometimes lenders will work with you if you have proven you are reliable.

Payne Insurance Group

Make sure you and your family are protected with the best insurance!

Payne Insurance Group provides insurance for auto, home, commercial, and much more! Payne Insurance Group has partnered with over 13 businesses across the Rio Grande Valley, As a result, we have created a one-stop-shop for all types of insurance!

Get your FREE insurance quote today!