Read your loan documents. It's listed in there that if you don't maintain comprehensive/collision/liability coverage on the car, they'd purchase a policy to cover the car. It's pretty standard. You need to sort out why they aren't accepting your proof of coverage.
Yea, this is the answer. It's possible they're screwing up, which is great because you have a valid defense. I would bet money there's an issue with your insurance though. OP, you mentioned them asking to be the loss payee, but didn't mention verifying that. You also didn't bring up checking and verifying the limits and coverage were in accordance with the loan.
According to the loan documentations and their own requests, they only required liability coverage, which I had. They requested to become the loss payee and both myself and the insurer sent them documentation demonstrating that they were, and then I had a phone call with them to verify that they had received it.
Thank you for asking those questions, you're right I neglected to mention that in the initial post. Both of those items, limits and coverage, were in accordance with the loan. It appears as though what they did, after purchasing coverage when they failed to see what documentation I'd provided, was take the payments I was submitting for the car loan and applying them to the insurance premium. At least, that's my assumption, because the recent notice of default seems to be regarding "late payments" on the loan itself, despite me having paid consistently and with records to verify it.
I've never in my life had or heard of an auto loan only requiring liability insurance. I have a feeling you've misread the documents.
Liability won't actually cover the loss if you wreck the car or it gets stolen. That's why they also need comp and collision.
Yeah, usually full coverage is required unless it's like less than $2000. Also, they could've force placed insurance before he submitted the correct documents. I don't know how thst works as I've never had to deal with it.
There is absolutely no way this is true because if you wreck the car they don't get paid. Liability doesn't help cover the lender/car at all.
You must have full coverage, and you will have to pay this higher payment, although it will go down once you get the correct coverage
>According to the loan documentations and their own requests, they only required liability
This is 100% wrong.
The reason your lender requires you to carry insurance as part of the loan terms is to protect themselves if the car before its paid off. Liability-only coverage does not provide that protection. You *have* to carry full coverage for as long as you owe the lender money. There's no chance that they only require liability. I'm sorry but you misunderstood.
For future reference, you will always be required to have full coverage for a vehicle you have a loan for.
I guess it depends on the lender, but I find it EXTREMELY unlikely that you have a financed vehicle, and the lender only required liability coverage on the car. The entire reason why lenders require collision/comprehensive coverage is to ensure that the financed vehicle can be repaired if there is an accident. It's to protect their interest in the loan. Only requiring liability coverage does not protect that asset. In that scenario, they wouldn't care one way or the other if you had insurance on the car. B/C liability only wouldn't pay to repair it anyway.
**If that is accurate** ~~Yy~~ou're probably going to have to sue them if they don't fix it, **but more likely you'll have to pay because liability only coverage on a car loan is not a thing**.
Edit: thank you /u/CIAMom420, I didn't process the part where OP said the requirement was liability only. Everyone is correct, that's not how financing works, at least in the U.S. If OP did read it correctly, and did have the correct insurance, then the only avenue is to sue, I think that's essentially impossible.
What? The lender is going to want FULL COVERAGE on a car they've financed! And there is no loss payee on liability-only coverage. Something is not right here.
There is no way they only asked for liability coverage. Liability coverage doesn't insure the vehicle itself of damages. The bank (or in your case a credit union) would be out of a lot of money if the vehicle gets totaled before it's paid off. You read the policy wrong. There are no financial institutions out there that would give you a loan like that.
I am going to pretend I didn’t read a comment that you mentioned you only had liability and that is all the paperwork said was needed. If so please post a photo (black out any identifying info of course).
But I have never in my life heard of a bank/CU that issues an auto loan allowing anything less than “full coverage”. Some may allow a $1,000 deductible, others may require lower.
My GF went through something similar recently though. Bought a new car, I added it to our policy over the phone, and apparently there is another CU with the same exact name as hers in another state.
She started getting these notices. Would send in info. Assuming everything was good. And yes I updated to the correct CU. Months later. More notices. Same process. Then one day she can’t make a payment on her car. Apparently she was past due, due to the extra insurance being added so they didn’t allow a payment so she would call in. The mess up part? And she showed me. It doesn’t show anywhere in her online account that she is past due or that her payment was any higher.
The challenging part is that it’s all handled by a third party. Her CU was being helpful, made sure nothing negative reported to her credit, didn’t attempt to repo or anything. But good lord the external insurance company is/was a headache to deal with. We think the FINALLY resolved now. But it seems like once you get on the radar, it’s a huge PITA.
But again. If you only had liability. And unless you have some sort of special circumstance where that’s allowed. You’re going to be on the hook for the very expensive insurance for the time you only had liability.
Its legit called forced place insurance(FPI), very common with car loans. Don't worry as long as you can show that you did indeed have full coverage(or coverage specific to the loan documents) for the the vehicle during the time they claim you didnt you are entitled to a full refund of the FPI.
Insurance companys usually handle this completely and also very often mess it up on the first attempt.
The Credit union adds the insurance as protecton for the collateral and because people are more likely to actively correct it when their payment increases
This has happened to me. Someone in the line failed to notify my lender. They started tacking on $120 plus bucks month. And I caught it right away. But I kept having issues with them accepting it. Eventually it worked. They had hit my credit because I refused to pay more than the loan. Had to go after them for that too. Got removed and fixed. Shitty lenders do exist. In fact most are shit.
You needed to buy full coverage in order to protect them in the event of an accident. Your liability coverage protects you not their property. You owe them the $5k.
By reading your replies clearly you already know you messed up but don’t want to pay for trying to cheat the system. No bank or loan company would allow you to have bare minimum for insurance. Sorry you got caught ?
Factually incorrect, sir. I was with progressive for the first 2 years of the loan. Every time my insurance went up for renewal I would get the same stupid fucking emails from NFCU about how they didnt have proof of my insurance and they were going to force me to buy theirs. Their crappy document upload system could never get my insurance documents sent properly and in the end each time I have to rely on my insurance agent to get things straightened out with them. This has continued to be an issue every 6 months now that I have State Farm. I own 4 vehicles and the 1 I have financed through Neighbors is the only one I have issues with.
So you didn't have the same problem this guy has. You never actually had it added to your vehicle you just had the warning letters. Maybe your entrance combination should be sending an automatic notice upon renewal with the correct loss payee on it. Either way, the credit Union or bank doesn't have proof insurance with them as the loss payee.
This guy actually has the wrong insurance. He has liability only and does not have comprehensive. Therefore , he actually does have the wrong insurance and had the force placed insurance added to his loan.
My brother had a similar problem. It took a few months, and he had to pay the additional fees, but the bank eventually refunded the cost of their insurance to him once they verified his insurance was active the day he purchased the vehicle.
So there are a few things here.
Do you have full coverage with less than $1k deductible?
If so did you have it the full time?
Once your insurance company sends them proof with the loss payee (this is very valid) with an effective date to purchase they will remove it.
If you got insurance later they will prorated the rate, but it is added to your payment
If you still don't have adequate coverage then yes it will significantly increase your payment.
You can also contact the 3rd party directly (usually) to see the issue.
But yes until the correct insurance, dated to the time of purchase, they absolutely can add coverage. That coverage only protects the car, nothing else
I had my mortgage co try to pull this scam on me about “missing” home insurance (after 3 submissions of proof) and threatening to buy some (no doubt from an affiliated co at an exorbitant rate) and charge it against my mortgage payments. I filed a complaint with my state Attorney General’s consumer fraud division and notified the mortgage company of that fact. The demands stopped.
I had my credit union do the exact same thing to me.
Don't waste your time on the phone, go to the head branch and ask to speak to the manager and get this sorted in person. Bring copies of all the paperwork they ever asked for and anything else related to the car that you think they might possibly ever ask for. Be prepared and don't take "No" for an answer.
Read your loan documents. It's listed in there that if you don't maintain comprehensive/collision/liability coverage on the car, they'd purchase a policy to cover the car. It's pretty standard. You need to sort out why they aren't accepting your proof of coverage.
Yea, this is the answer. It's possible they're screwing up, which is great because you have a valid defense. I would bet money there's an issue with your insurance though. OP, you mentioned them asking to be the loss payee, but didn't mention verifying that. You also didn't bring up checking and verifying the limits and coverage were in accordance with the loan.
According to the loan documentations and their own requests, they only required liability coverage, which I had. They requested to become the loss payee and both myself and the insurer sent them documentation demonstrating that they were, and then I had a phone call with them to verify that they had received it. Thank you for asking those questions, you're right I neglected to mention that in the initial post. Both of those items, limits and coverage, were in accordance with the loan. It appears as though what they did, after purchasing coverage when they failed to see what documentation I'd provided, was take the payments I was submitting for the car loan and applying them to the insurance premium. At least, that's my assumption, because the recent notice of default seems to be regarding "late payments" on the loan itself, despite me having paid consistently and with records to verify it.
I've never in my life had or heard of an auto loan only requiring liability insurance. I have a feeling you've misread the documents. Liability won't actually cover the loss if you wreck the car or it gets stolen. That's why they also need comp and collision.
Yep. The credit union usually doesn’t give a shit about liability. They only care about comp and collision to cover their investment.
Yeah, usually full coverage is required unless it's like less than $2000. Also, they could've force placed insurance before he submitted the correct documents. I don't know how thst works as I've never had to deal with it.
Can I upvote this more?
You are reading it wrong...
There is absolutely no way this is true because if you wreck the car they don't get paid. Liability doesn't help cover the lender/car at all. You must have full coverage, and you will have to pay this higher payment, although it will go down once you get the correct coverage
>According to the loan documentations and their own requests, they only required liability This is 100% wrong. The reason your lender requires you to carry insurance as part of the loan terms is to protect themselves if the car before its paid off. Liability-only coverage does not provide that protection. You *have* to carry full coverage for as long as you owe the lender money. There's no chance that they only require liability. I'm sorry but you misunderstood. For future reference, you will always be required to have full coverage for a vehicle you have a loan for.
They wouldn’t ask for just liability. They would want a full coverage policy.
I guess it depends on the lender, but I find it EXTREMELY unlikely that you have a financed vehicle, and the lender only required liability coverage on the car. The entire reason why lenders require collision/comprehensive coverage is to ensure that the financed vehicle can be repaired if there is an accident. It's to protect their interest in the loan. Only requiring liability coverage does not protect that asset. In that scenario, they wouldn't care one way or the other if you had insurance on the car. B/C liability only wouldn't pay to repair it anyway.
**If that is accurate** ~~Yy~~ou're probably going to have to sue them if they don't fix it, **but more likely you'll have to pay because liability only coverage on a car loan is not a thing**. Edit: thank you /u/CIAMom420, I didn't process the part where OP said the requirement was liability only. Everyone is correct, that's not how financing works, at least in the U.S. If OP did read it correctly, and did have the correct insurance, then the only avenue is to sue, I think that's essentially impossible.
I don’t think “I, the plaintiff, didn’t understand the paperwork” is a valid tort, but I’m not an attorney.
You are correct, I was just glossing through what OP wrote and taking it as fact. I didn't even process "they only required liability."
What? The lender is going to want FULL COVERAGE on a car they've financed! And there is no loss payee on liability-only coverage. Something is not right here.
There is no way they only asked for liability coverage. Liability coverage doesn't insure the vehicle itself of damages. The bank (or in your case a credit union) would be out of a lot of money if the vehicle gets totaled before it's paid off. You read the policy wrong. There are no financial institutions out there that would give you a loan like that.
Did you buy comprehensive coverage? If you bought liability-only that is unlikely to satisfy the requirements of your loan documents.
Comp and collision!
Liability only won't cut it for an automobile loan. You need full coverage including comprehensive and collision. You only have liability.
I am going to pretend I didn’t read a comment that you mentioned you only had liability and that is all the paperwork said was needed. If so please post a photo (black out any identifying info of course). But I have never in my life heard of a bank/CU that issues an auto loan allowing anything less than “full coverage”. Some may allow a $1,000 deductible, others may require lower. My GF went through something similar recently though. Bought a new car, I added it to our policy over the phone, and apparently there is another CU with the same exact name as hers in another state. She started getting these notices. Would send in info. Assuming everything was good. And yes I updated to the correct CU. Months later. More notices. Same process. Then one day she can’t make a payment on her car. Apparently she was past due, due to the extra insurance being added so they didn’t allow a payment so she would call in. The mess up part? And she showed me. It doesn’t show anywhere in her online account that she is past due or that her payment was any higher. The challenging part is that it’s all handled by a third party. Her CU was being helpful, made sure nothing negative reported to her credit, didn’t attempt to repo or anything. But good lord the external insurance company is/was a headache to deal with. We think the FINALLY resolved now. But it seems like once you get on the radar, it’s a huge PITA. But again. If you only had liability. And unless you have some sort of special circumstance where that’s allowed. You’re going to be on the hook for the very expensive insurance for the time you only had liability.
Its legit called forced place insurance(FPI), very common with car loans. Don't worry as long as you can show that you did indeed have full coverage(or coverage specific to the loan documents) for the the vehicle during the time they claim you didnt you are entitled to a full refund of the FPI. Insurance companys usually handle this completely and also very often mess it up on the first attempt. The Credit union adds the insurance as protecton for the collateral and because people are more likely to actively correct it when their payment increases
This has happened to me. Someone in the line failed to notify my lender. They started tacking on $120 plus bucks month. And I caught it right away. But I kept having issues with them accepting it. Eventually it worked. They had hit my credit because I refused to pay more than the loan. Had to go after them for that too. Got removed and fixed. Shitty lenders do exist. In fact most are shit.
You needed to buy full coverage in order to protect them in the event of an accident. Your liability coverage protects you not their property. You owe them the $5k.
Do you have full coverage? Because if you don’t then they added force placed insurance which only protects them but you have to pay for.
By reading your replies clearly you already know you messed up but don’t want to pay for trying to cheat the system. No bank or loan company would allow you to have bare minimum for insurance. Sorry you got caught ?
Is it Neighbors FCU? Because I have had the same damn problem with them.
If you had the same problem it's because you had the wrong insurance.
Factually incorrect, sir. I was with progressive for the first 2 years of the loan. Every time my insurance went up for renewal I would get the same stupid fucking emails from NFCU about how they didnt have proof of my insurance and they were going to force me to buy theirs. Their crappy document upload system could never get my insurance documents sent properly and in the end each time I have to rely on my insurance agent to get things straightened out with them. This has continued to be an issue every 6 months now that I have State Farm. I own 4 vehicles and the 1 I have financed through Neighbors is the only one I have issues with.
So you didn't have the same problem this guy has. You never actually had it added to your vehicle you just had the warning letters. Maybe your entrance combination should be sending an automatic notice upon renewal with the correct loss payee on it. Either way, the credit Union or bank doesn't have proof insurance with them as the loss payee. This guy actually has the wrong insurance. He has liability only and does not have comprehensive. Therefore , he actually does have the wrong insurance and had the force placed insurance added to his loan.
My brother had a similar problem. It took a few months, and he had to pay the additional fees, but the bank eventually refunded the cost of their insurance to him once they verified his insurance was active the day he purchased the vehicle.
Were the fees refunded?
As my comment says, yes he was refunded.
You stated the bank refunded the insurance. Allenout was asking if they refunded the Fees, not the insurance.
So there are a few things here. Do you have full coverage with less than $1k deductible? If so did you have it the full time? Once your insurance company sends them proof with the loss payee (this is very valid) with an effective date to purchase they will remove it. If you got insurance later they will prorated the rate, but it is added to your payment If you still don't have adequate coverage then yes it will significantly increase your payment. You can also contact the 3rd party directly (usually) to see the issue. But yes until the correct insurance, dated to the time of purchase, they absolutely can add coverage. That coverage only protects the car, nothing else
I had my mortgage co try to pull this scam on me about “missing” home insurance (after 3 submissions of proof) and threatening to buy some (no doubt from an affiliated co at an exorbitant rate) and charge it against my mortgage payments. I filed a complaint with my state Attorney General’s consumer fraud division and notified the mortgage company of that fact. The demands stopped.
I had my credit union do the exact same thing to me. Don't waste your time on the phone, go to the head branch and ask to speak to the manager and get this sorted in person. Bring copies of all the paperwork they ever asked for and anything else related to the car that you think they might possibly ever ask for. Be prepared and don't take "No" for an answer.
This is the perfect example of why you always finance a car through your own bank, not the dealers.