(800) 253-1482Do You Need Full Coverage on a Financed Car in Missouri?
Summary: Missouri law doesn’t mandate full coverage, but most lenders require liability, comprehensive, and collision insurance for financed vehicles. Uninsured and underinsured motorist coverage is also mandatory in the Show Me State. Driving uninsured risks fines, lawsuits, and vehicle impoundment and if you forgo the right coverage, force-placed insurance is purchased by your lender. This protection is costly and benefits only the lender. To save money, compare insurers, bundle policies, and maintain full coverage for better protection. Estimated Read Time: 5 mins
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Missouri doesn’t require full coverage by law, but it may be necessary if you’re financing or leasing a vehicle. Lenders typically mandate liability, comprehensive, and collision coverage. Financed car insurance requirements mandate full coverage to protect against significant financial losses based on your vehicle and financial situation. Below, we’re breaking down why lenders require so much coverage and how to save money when shopping for auto insurance.
Minimum Full Coverage for Financed Cars in Missouri
When financing or leasing a vehicle, lenders put car insurance requirements in place to protect their investments.
In Missouri, liability car insurance is mandatory by law and a standard requirement for lenders.
Additionally, most lenders demand comprehensive and collision coverages to ensure the vehicle is fully protected in case of weather damage or theft.
Missouri law also requires uninsured/underinsured motorist (UM/UIM) coverage, which lenders often include in their requirements.
Some lenders may even mandate gap insurance to cover the difference between the car’s value and the loan balance in the event of a total loss.
Missouri auto insurance on financed vehicles is designed to protect against more risk benefiting both drivers and lenders in the event of a loss.
Why Do I Need Full Coverage on a Financed Car in Missouri?
Auto loan and lease agreements require specific insurance terms, often known as full coverage, until the loan is repaid. Lenders often request proof of insurance and may enforce "force-placed insurance" if coverage lapses.
Also called single-interest insurance, these are expensive policies, added to your monthly payments, and only protect the lender—not you.
Unlike drivers seeking affordable options, lenders don’t shop for the best rates, leading to higher costs.
So, while your auto policy will cover vehicle damage and repossession, it’ll offer no personal protection.
Maintaining your own auto insurance in Missouri is typically cheaper and provides better coverage for your needs.
What Happens if You Wreck a Financed Car Without Insurance?
Driving uninsured in Missouri is risky and illegal. Failing to maintain minimum coverage can result in fines of up to $575, license suspension, and jail time.
Beyond legal penalties, the financial risks are severe. If you wreck a financed car without insurance, you’re liable for the remaining loan balance. Failure to pay can lead to lawsuits, wage garnishment, or bankruptcy.
Causing an accident without coverage exposes you to lawsuits for property damage or injuries. Out-of-pocket costs for repairs or medical bills can quickly lead to financial ruin.
Uninsured drivers also face lasting consequences like damaged credit and prolonged financial stress.
Maintaining full coverage auto insurance not only ensures compliance with your loan or lease but also protects you from these serious financial risks.
Can I Put a Financed Car on Someone Else’s Insurance in Missouri?
Full coverage for a financed car may be difficult if you don’t own the vehicle, as insurers require "insurable interest" to issue a policy.
Ownership provides clear interest, but being the primary policyholder on a car you don’t own—especially if you don’t live with the owner—can be challenging.
Insurers often see non-owner policies as potential fraud risks, leading to higher premiums or stricter requirements.
Many insurers mandate that the policyholder has control of the vehicle, with exceptions being rare and costly.
For financed cars, lenders typically require the borrower to hold the policy, ensuring their financial interest is protected.
The loan holder must often be listed on the insurance, even if someone else uses the car regularly.
However, scenarios involving families, such as parents insuring children or gifted vehicles, may allow exceptions.
In these cases, reviewing loan documents and consulting with the lienholder and insurer can help ensure proper coverage without complications.
Insuring a Car Financed by Someone Else
Start by reviewing insurance carriers’ rules, as some may refuse coverage even if you live with the car’s owner.
Car insurance for financed vehicles varies by state, so explore different insurers to find one that’s more accommodating to non-owners.
Clearly explain your need for coverage, such as using the car for commuting or as your primary transportation. Providing proof of regular use can strengthen your case.
If you don’t have access to public transit or another vehicle, emphasize this to highlight your reliance on the car.
Consider co-titling the vehicle by adding your name to the title, which establishes an insurable interest and simplifies the process.
For financed cars, co-titling can be complex but often more effective than proving the need for the vehicle alone.
How to Finance a Car Without Full Coverage in Missouri
Maintaining full coverage insurance for financed cars may be required but if you really don’t want to go that route, some options may be available.
Keep in mind that this is not ideal, recommended, or in many cases your best option. Nevertheless, here are options to explore:
Compare Multiple Lenders
To avoid full coverage when financing or leasing, simply find a lender that doesn’t require it as part of the agreement.
While rare, some lenders may waive this condition, though you’ll need to compare multiple companies to find one.
However, higher interest rates from such lenders might offset any savings from forgoing full coverage.
Single-Interest Insurance/Force-Placed Auto Insurance
If you can’t find a lender that doesn’t forgo typically financed car insurance requirements, forced-placed policies are another option.
But remember, with these policies, lenders prioritize their investment and you risk being underinsured.
Single-interest insurance may not cover all damages from an accident, leaving you vulnerable. Opting for traditional full coverage insurance can save money and offer more protection.
Cheap Car Insurance on Financed Vehicles in Missouri
Finding the cheapest rate for your coverage is important but you also want to make sure you're properly insured and protected by a carrier you can trust.
Freedom Insurance Group partners with top-rated carriers across Missouri delivering the lowest premiums and personalized protection.
If you're financing or leasing a vehicle, compare multiple carriers offering full coverage insurance on financed cars using our free quote tool below, or call and ask an agent today:
