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I have a 2009 Nissan Sentra. It was my understanding that in NYS, if you have a lien on a vehicle, the vehicle must have collision and liability coverage. I purchased the vehicle from a 'Buy here, Pay here' place and have an official lien on the title. I chose Progressive and filled out everything I needed to online. I now look at the history and it says i have liability but not collision/comprehensive coverage. I sent the car dealer the insurance information before we finalized everything and put the car on the road. They apparently didn't look at it and went ahead and got the car on the road. I've had the car 6 months.

Today I was in an accident that didn't involve anyone else. The car is completely totalled. I'm just wondering if Progressive or the dealership made an error and are somehow responsible because of the legality of having to have comprehensive coverage in NYS . The dealership is claiming I changed my insurance to save money, but they're the ones that signed off on what I gave them. Without collision coverage I'm essentially out of a car and still have to pay the dealership for it. I just want to know where I stand in all of this. Thanks

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    I'm voting to close this question as off-topic because not about maintenance or automotive theory.
    – tlhIngan
    Feb 8 '17 at 5:20
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    I'm voting to close this question as off-topic because it is about legal issues - it might be better off on the law stackexchange
    – Nick C ♦
    Feb 8 '17 at 10:06
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The only 2 ways to mitigate the financial risk of crashing a car are 1) getting comprehensive coverage and 2) keeping enough money in the bank to deal with it without insurance. There's no grey area.

Having and keeping proper insurance to make the car street legal is the owner's responsibility. In some jurisdictions, cars cannot be registered without the appropriate insurance in place. This matter of being required to have comprehensive insurance in place is only because of the lien, it is not a requirement in order to have a vehicle being street legal, so nobody broke any laws on this aspect.

On the other hand, having comprehensive insurance on a vehicle with a lien on it may be a requirement of the lender (the bank or financing company), but it probably is not a legal requirement in terms of the Government. Your only legally binding obligation is what you signed to get the loan, and one of those papers likely said you will have and keep comprehensive coverage on the vehicle. If you hadn't wrecked the car, the bank could have taken you to court for payment of the loan because not having comprehensive coverage is a breach of the terms of the contract.

Different jurisdictions have different mechanisms to deal with situations like your, here are the 3 likely outcomes. Just check about what happens in your jurisdiction:

  1. The bank wants you to repay the entirety of the loan immediately.
  2. The bank can accept something else of value (a house, for example) as collateral for the loan, so you can keep making payments instead of repaying the entire loan immediately.
  3. You can buy another car and get a loan that is big enough to buy this car and payoff the first loan. This is rare, but I've seen it done. Usually, it will be a car with high value so that the new loan will not be too much higher than the actual value of the car.
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You are responsible for insuring your vehicle. Period. Full stop. It's in the bank's interest to make sure you insure your vehicle since it's their collateral on the loan they've given you. If that collateral should happen to suddenly be worthless from an accident, the bank wants to know that their loan will still be repaid. It's very likely that they had you sign a document stating this. On a side note... this is a good reason to use a company with in person insurance agents. They will help you choose the correct coverage for your vehicle so you don't end up in a situation like this.

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  • If I signed a document saying I'd have full coverage, and then the lien holder accepted the insurance proofs and paperwork I gave them, registered the car, and signed the same paperwork, wouldn't that void that agreement or at least nullify that clause?
    – Terrib1e
    Feb 7 '17 at 20:25
  • You messing up the insurance doesn't release you from liability of paying off the loan. Your bank's administrative error of missing the fact that you didn't have full coverage isn't going to get you out of paying the loan. You made the mistake of using Progressive and their online interface to get insurance. You went with the lower price, no collision coverage. It's nobody else's fault. There's no insurance agent, nobody to blame but yourself.
    – cory
    Feb 7 '17 at 20:52
  • I've known this entire situation is my responsibility and knew that in the black and white world most of this was my fault. I was only looking for a way to mitigate some of the financial burden of this incident. The consequences of all of this aren't all that severe, I just wanted to see if there was any grey area to try to recoup whatever losses I could. Fortunately the bank wasn't the only party to have made an administrative error. Progressive made some mistakes as well so this won't be a total loss. I appreciate your perspective though, thanks.
    – Terrib1e
    Feb 8 '17 at 2:51
  • You can try making that case, in court if needed, but don't bet on it. They'll say "didn't you notice the insurance was way too cheap?" Anyway, telling the bank your car is totaled will get your loan called immediately. You better be able to pay it all, or they'll drop the collections hammer on you hard and fast. Of course that won't happen if they don't know it's wrecked. This is not unusual and they know the drill: usually the engine has blown up. Related, never owe money on a car that's out of warranty.
    – Harper - Reinstate Monica
    Feb 8 '17 at 5:19

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