You would need to contact a lawyer or your state's consumer protection division (usually part of the attorney general's office for a state) to find out if this situation with the forced insurance and repossession is legal or not.

We can tell you it is likely that your financial documents and paperwork state that the forced insurance can be placed on the vehicle by the lien holder if you fail to obtain and maintain the auto insurance coverages they require you to have on the vehicle at all times. It is also likely that your loan or lease papers say that the forced insurance payments will be added onto your car payments. So if you got behind due to the extra amount you had to pay for the forced insurance then it is very possible that it is legal for the lien holder to repossess the vehicle.

If the lien holder applied all of your payment to the forced insurance and none to the actual balance of the loan then this is an issue you would need to discuss with them and probably a lawyer as well to find out your rights.

As you may be aware now forced insurance means that the finance company takes out insurance on the car, to protect their asset which you are failing to do by not keeping the mandated insurance on it. The cost of this insurance is then passed onto you, usually in the form of an added charge on your loan or lease payment. The cost of forced insurance is typically high and with no real benefit to you.

Loan or lease documents usually state that if you do not obtain or keep the appropriate insurance coverage on the vehicle that they, the lien holder, will secure such coverages and charge you for it. When the financial place gets insurance for you, these charges are subject to interest and the premiums will be higher than if you purchased the insurance yourself. This forced insurance typically provides protection to the bank or other financial institute, not you, for their interest in the car.

If you are able to get the car back, or finance another vehicle, be sure to keep the required amount of insurance on the vehicle, usually at least the state minimum liability coverages plus collision and comprehensive coverages. If you keep your own auto insurance coverages on the vehicle, which you can shop around for and thus get the best rates possible, then you will not have to pay for "forced" insurance that the lien holder obtains for the vehicle.