can you get liability insurance on a financed car?

UPDATED: Jul 11, 2017

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UPDATED: Jul 11, 2017Fact Checked

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Asked July 11, 2017

1 Answer

Alabama enacted a mandatory Liability Insurance Law in the year 2013 that requires all motorists to obtain auto insurance for registered vehicles.


What are the Minimum Requirements for the Car Insurance?

The Alabama Car Insurance law requires drivers to obtain liability insurance to aid in the payment of injuries or damages caused to others in a car accident. The liability insurance cover includes:


  • A minimum of $ 25000 for death or bodily injury per person
  • A total of $ 50,000 for death or injuries per accident
  • $ 25,000 for property damage


Does the Insurance Cover include Personal Injury Costs or Damages to the Motorist's Car?

The liability insurance does not cover personal injuries or damages to your car. As such, most Alabama car insurance companies provide different covers to help take care of the costs.

  • Collision cover; it takes care of costs relating to damages on your vehicle
  • Medical and funeral cover; assists in the payment of medical and funeral expenses after an accident
  • Comprehensive coverage; it helps pay for damages to a driver's car that are out of his control e.g. accidents caused by bad weather
  • Uninsured cover; the option protects you after an accident involving motorists who are uninsured or underinsured


Does the Liability Insurance Cover Financed Vehicles?

Motorists whose car has been financed or leased should obtain collision and comprehensive covers as part of the financing agreement. Lenders require both covers in addition to state minimum requirements.


What is an Alabama Auto Insurance Plan?

Since liability car insurance is mandatory in Alabama, all licensed motorists are sure to obtain insurance for their vehicles. However, auto insurance companies have the option of denying cover to high-risk drivers. Such motorists can obtain insurance by purchasing the Alabama Auto Insurance Plan where the insurance company shares the risk with the driver.

Answered July 12, 2017 by JDouglas

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