New cars are brought practically every day by people from across the world. Most people purchase these cars by making a down payment of around 20% and getting the financed by banks or lenders. While buying the car and getting the finance looks pretty easy to these people, things start turning a little awry when they are asked to buy full coverage car insurance for their new possession. They would probably wonder why the lenders are insisting on such insurance when other options are available at a cheaper rate. Let us look at the reasons why lenders insist on full coverage car insurance.
A full coverage car insurance policy is usually known to insurers as a comprehensive cover on the car. These policies will offer coverage against all risks that the car may ever be exposed to leaving the lenders safe with the knowledge that their money is covered for against any risks. The policyholder also will realize the value of the coverage once the read through the policy document of the insurers.
What risks does a such a policy cover? Any answer to this effect would be an understatement of the value of the policy. This type of policy covers every risk other than intentional damage by the owners of the car to make a malafide claim. The policy covers the owners of the car from any claims arising from accidents where they may be held at fault. They can claim for damages to their own car apart from having the vehicle of the other party involved, repaired as well. They will be able to make a claim for any injuries arising out of the accident to themselves and any member in the other car, which is subject to certain limitations that will be specified by the insurer.
When buying insurance for their car, they will in fact be investing in a policy that covers practically any damage they may cause to other vehicles and property. They will also be able to make a claim from the insurer if they find their car has been stolen or damaged by other people. In short, this is a policy that is worth buying and has no negative sides hidden in fine print.
Financers of cars take these factors into consideration when insisting that you buy full coverage car insurance policy for the new car they financed. They will be looking to keep you safe from claims as well as looking to have their money insured as well.