Forced Auto Insurance

[rbelcarist]

Missouri
In October of 2001 my financing company forced insurance on my vehicle because they believed there was a lapse in my coverage. I came into one of their branch office and notified one of the staff that I did have insurance on my vehicle and showed proof. She told me that my next billing statement would only show the amount of my car payment and not the forced insurance. The next month I received a statement which include the additional amount for the forced insurance. Rather than continuing to go back and forth with the financing company, I cancelled my own insurance policy and continued to pay the financing company for my car note and car insurance. In May of 2002 I took out a new less expensive insurance policy and notified my financing company so that they would cancell their exising policy. They informed me that I was to pay them and additional $350 for the lapse in coverage between when I first decided to take their insurance, and when I purchased my own. I don't feel that I should be responsible for this amount because the policy was forced when I was not in violation of my agreement to maintain insurance on the vehicle. Even after submitting proof of insurance they continued to bill me for this amount. I did not know that the entire time I was paying them for insurance, the policy was just a Collateral policy that only protected the finance company. No one ever explained this to me, nor was I ever sent a detailed policy for the insurance that I was paying for. I was issued two traffic tickets during this time, because I did not have proof of insurance. Am I liable for this remaining amount on the policy or is the insurance company?

 

[stephenk]

Why did you cancel your own liability coverage? You only contacted you finance company once about the insurance and then just gave up?

Did you ever request a copy of the type of insurance the finance company purchased? When did you find out the policy was only for property damage?

When you cancelled your own liability policy did you discuss the cancellation with your agent and ask if that was the proper course to take?

After you received your first ticket for not having proof of insurance why didnt you do something about getting information on the type of insurance you had?

I dont think you have to pay for lapse in coverage since you had proof of insurance for that time period. Did your finance company ever tell you why they thought you had no coverage for that time period?

 

[rbelcarist]

I cancelled my own coverage because I was paying for both, my insurance policy and the finance company's policy. Since I didn't not have the option to make partial payment to the finance company. I cancelled my own policy. I thought I might be more convienant to pay both, the car note and the car insurance with one check. I submitted a copy of my insurance Policy to the finance company, and I went in person to their office and showed them. But I continued to be billed for their insurance.

The finance company sent me a letter stating that they were billing me for Collateral Insurance. I didn't know what collateral insurance was, I thought insurance was insurance. It was not untill I submitted my new insurance information to the finance company that I was told their insurance only covered the finance company in case the vehicle was wrecked.

I did not ask my insurance agent if this was the right thing to do. I figured that the cost for the finance company's insurance and mine was about the same so it was no big deal to pay the finance company instead.

I did contact the finance company about getting proof of insurance. I was told to use the letter that was issued to me about my forced insurance as proof. One police officer refused it because it did not include the VIN number.

The Finance company keeps billing me for the remaing balance on this policy because I did not have my own insurance between Janurary and May. I explained to them that was because I was paying them for insurance, but they feel that it was my fault. This whole issue would never have surfaced had they reviewed the documents I submitted and kept record of them. When I asked why I forced insurance was placed on my vehicle in the first place, I did not receive a clear response. I have not been paying toward the balance owed on this insurance policy. I just wanted to make sure that I was within my legal rights.