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If my car is paid off, so I no longer have a lien against the vehicle, could/should my insurance cost go down?

No. If you have not changed any of the coverages on your vehicle, just the fact that you no longer have a lien holder would not normally cause your car insurance rates to go down.

It may be possible that if a car is paid for in full or if it is financed could be a rating factor that is applied to some auto insurance carrier's rating algorithm (calculations); however we do not know of any car insurance company that does this.

A car insurance company may ask on an auto insurance application if your vehicle is paid in full or financed primarily to determine the type of coverages you, the policyholder, needs to purchase. When you have a loan or lease on your vehicle the lien holder will require that you carry full physical damage coverages of Collision and Comprehensive, so an automobile insurance company will want to make sure you are buying the right coverages for your financed vehicle.

While in general it is the lien holder that requires full coverage on your financed vehicle, there are some car insurance companies have filed rates with the state that required physical damage coverages on financed or leased vehicles. Esurance is one example of an insurance company that has this requirement. If you wanted to lower your auto insurance coverages from full coverage to Liability only with this type of car insurance company you would have to prove you no longer have a lien holder.

Once you have paid off your vehicle and no longer have a lien holder it is your choice if you keep physical damage coverages. If you do keep these coverages after paying off your car there is not normally any rating difference then if you still had a lien holder. If however, you drop Collision and Comprehensive coverages and keep only basic Liability coverages, then your car insurance rates would be lowered since you are paying for less coverage.

Having a financed or paid off vehicle is not a rating factors that insurers normally consider. A few of the factors they do look at are: your age, the kind of vehicle you drive, your claims history, your driving record and in some states your credit history. If you are looking to lower your rates also ask your auto insurance agent about discounts you may be eligible to receive.

When shopping around for low cost car insurance come to CarInsurance.com, an online marketplace. We offer you the ability to shop for car insurance online and the ability to purchase your policy directly through CarInsurance.com.


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1 Responses to "If my car is paid off, so I no longer have a lien against the vehicle, could/should my insurance cost go down?"
  1. Anonymous

    Good answer