Laws differ by state but generally most state laws allow for a lien holder to take back a vehicle if you fail to uphold your part of the loan or lease contract.Some lien holders will not repossess the car but will secure coverage on it and add these charges to your payments.

The lien holder has a right to protect their interest or collateral, the vehicle, by means of repossession or getting "forced" insurance on it. If your loan agreement includes the provision allowing the lien holder to obtain auto insurance for the vehicle, the insurance charges are subject to interest in most states so the premiums will be much higher than if you purchased the insurance yourself typically.

A breach in your contract or agreement with your lien holder or lending institution can be serious. If the car is repossessed it will show up as a negative on your credit report and can make it hard to obtain a loan on a new car.

If you are in need of insurance for your financed vehicle due to a lapse, you can obtain an online auto insurance quote here with us.