Things Your Car Insurance Doesn't Cover

When you get an auto loan, one of the requirements is keeping full coverage insurance on the vehicle. However, since there's no "full coverage" package that's universal to all insurance companies, you need to know what types of car insurance give you the most coverage in the most situations.

Is There a Hole in Your Car Insurance Coverage?

Not all insurance covers all instances of damage that could occur. In fact, there are a few holes that can be overlooked if you don't have the right kind of coverage.

  • Things Your Car Insurance Doesn't CoverDrivers not listed on your policy aren't typically covered, even if they live with you. Anyone who has permission to use your vehicle has to be listed on the insurance policy if you want coverage while they're driving.
  • Personal property in your car isn't covered under an auto insurance policy. Personal belongings are usually covered under your homeowners or renters insurance policy, so if you routinely leave things in the vehicle, make sure you have the coverage needed to insure them in case of theft.
  • Modifications aren't normally covered on a standard car insurance policy. If you want to make upgrades and mods to your vehicle, you may need a special type of coverage for customized parts and equipment. Be careful when modifying your car if it's under warranty – some mods can make your warranty void, meaning you're left paying for service out of pocket.
  • Business uses aren't covered under personal auto insurance policies. If you're an Uber driver or in the food delivery business, you should be sure to ask your employer about the insurance requirements and coverage provided by the business. If there aren't any, you may need to consider commercial car insurance coverage.
  • Your auto loan also isn't covered when you have a full coverage insurance policy. Standard car insurance covers the value of a vehicle at the time it's totaled or stolen. And if you're in a fresh auto loan when that happens, you likely owe more on the car than it's worth. This is called having negative equity, and that gap can leave you owing on a vehicle you can no longer drive. Ask your insurer or dealer about getting a guaranteed asset protection (GAP) insurance policy to make up the difference if something happens.

Full Coverage Auto Insurance

Since getting an auto loan also means getting full coverage car insurance, it's important to know what you're getting. A typical "full coverage" policy includes some combination of liability, collision, and comprehensive coverage, giving the driver the most protection possible when the unexpected happens.

  • Liability insurance helps to cover medical expenses and property damage from an accident when you're at fault.
  • Collision insurance covers vehicle repairs from accident-related damages no matter who's at fault for the collision.
  • Comprehensive insurance covers damage from things that aren't collision related, such as floods, hail, falling trees, or animal strikes.
  • Underinsured or uninsured motorist coverage protects you if the other driver in an accident doesn't have enough coverage or isn't covered at all.

Having the most coverage you can is always a good idea, especially if you're in an auto loan. If you don't keep up with your car insurance during a loan, or you don't carry a high enough coverage limit, you could be putting your entire auto loan at risk.

Not having car insurance on a financed vehicle could lead to force-placed auto insurance, which is typically more expensive, or even a loan default.

Ready to Find a Car to Insure?

When you're ready to finance your next car, look no further than The Car Connection to get the process started. We’ve secured a nationwide network of special finance dealerships that work with subprime lenders who can assist people in many credit situations.

Whether you have bad credit, no credit, or a recent bankruptcy, we want to get you connected to a dealer in your area. To get started today, simply fill out our fast, free, and no-obligation auto loan request form!


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