New York Insurance requirements – Financing or Leasing a vehicle.

So you are buying a brand new car, or a used vehicle from a dealership! Congrats on the new vehicle! If a bank is involved in some way shape or form for financing this vehicle whether it is an auto loan, or a leased vehicle – the insurance requirements can be specific. But luckily I am here to explain it to you.

Lets say you get an auto loan to finance a brand new car. A bank is going to require you to carry two coverages. These are “comprehensive coverage” and “collision coverage”, also often just referred to as comp and collision. Some people may also refer to it as “full coverage”, but this term of full coverage may be a little misleading. Many people may mean different things when they say full coverage, for example some people may consider towing coverage included in their definition of full coverage. The bank does not require you to have towing, rental car, or even full glass coverage when financing a car. Typically, a bank is going to require you to have comprehensive and collision coverage at a deductible of $1000 or lower. Some banks make it a $500 deductible or lower, but by far in my experience the majority of banks require it to be $1000 or lower. Check specifically with any bank you finance an auto loan with. Along with that, they will be required to be listed as an additional interest and loss payee. This just means that if you total your car, payment will be issued to the bank in order to protect the loan they issued you.

Banks will want you to have comprehensive and collision coverage on your vehicle to protect their investment. If you total your car and don’t get it repaired, and lets say you also don’t pay your auto loan, then they would have nothing to repossess in the event of you not paying the loan off. So this forced coverage by the bank protects their investment.

Leasing a car can have additional requirements. While it will typically also include the same deductible requirements usually at $1000 or lower, it will also require certain levels of liability. A majority of leasing companies will require $100,000 per person, $300,000 per accident, $50,000 property damage liability coverage. Some leasing companies do not require this, and always check with your financing company, but a vast majority do require this. The reason for that is that the leasing company is listed on the title of the car since you do not own it, meaning they open themselves up to a certain amount of liability.

Overall this should help inform you on the correct kinds of coverage you are going to need when leasing or financing a vehicle in New York.