Vehicle Loans

AUTO INSURANCE

The state of Pennsylvania has established a minimum insurance requirement for all vehicles. The present minimum coverage you can have and still legally drive is liability coverage of $15,000 per person, $30,000 accidental bodily injury and $5,000 property damage and medical coverage of $5000. Although these are state mandated minimum amounts, it is very prudent to carry higher amounts of insurance.

For lenders that hold the title as collateral, additional coverage is mandated by the loan or security agreement governing the loan. Normally, all vehicles pledged as collateral must carry comprehensive and collision coverage in addition to the state minimum requirements. This additional coverage protects the actual collateral and provides funds for repairs to the vehicle in the event of an accident. Most security agreements contain language that the lender can actually purchase insurance coverage on a vehicle if the owner fails to obtain it on their own. This is called forced placed insurance. This insurance only covers physical damage to the vehicle and will not provide any benefit for medical or property damage to other people's property. This type of insurance is normally very expensive and is added to the outstanding loan balance.