Car insurance can be confusing, and in this economy, it can be expensive. Understanding the different terms used that insurance agents and lien holders use can save you hundreds of dollars per year. It is important to understand what a lien holder or leasing agent requires when it comes to car insurance before you start to purchase a new or used vehicle.
When it comes to the additional interest insured part of the insurance world it is pretty simple and a necessity. What an additional interest insured is on your car insurance policy by definition is a company or person who is protected under your insurance policy if they are named in a lawsuit due to an accident that is deemed the policy holders fault.
Most leasing companies and lien holders require their car buyers to have this on their car insurance policies. Basically it will protect these companies from being sued if you are in an accident. This not only protects these companies from liability, but it can protect the policy holder as well. If this protection was not available the consumer would suffer due to increased car payments to pay for this liability.
Since additional interest insured is generally required on a person’s car insurance policy if they are leasing or financing a vehicle your insurance agent will have all the necessary paperwork to meet this requirement. Most individuals may not even know that they have this on their policy, however if you lease or finance a vehicle it is generally required. Because of this requirement that is why your insurance agent generally asks you if you are leasing or financing a vehicle and who through, that way he or she will have all the necessary paperwork ready for you when you purchase your policy.