No, normally if your car is financed you cannot only carry liability insurance on the vehicle. Most all lien holders (finance companies) will require that you carry liability plus collision and comprehensive coverages on the vehicle. The physical damage coverages of collision and comprehensive protect the car which is the lien holder's asset while liability only covers you for damages you have done to others.
Having gap insurance only helps you if your vehicle is a total loss and your primary insurance company pays out the actual cash value (ACV) for the vehicle. Gap then pays the balance of the loan after ACV is paid out. If you do not have physical damage coverages on your vehicle to pay the ACV then your gap insurance would not be able to be used. You then would be stuck paying on a car that was a total loss.
Finance companies require you fully cover the vehicle you are paying on until you pay it off completely and thus get the title turned over to you. When you own the car in the free and clear you then can reduce covers if you wish to only your state's liability coverages.
If you do change your auto insurance to only liability your finance company will normally be informed by your insurer (since your lien holder is normally an additional insured on the policy) and may placed forced insurance on your vehicle. Forced insurance is expensive and usually added to your monthly payment amount.
Forced insurance means that the finance company would take 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 would be passed onto you, usually in the form of an added charge on your loan or lease payment.
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 want to reduce your car insurance to liability only you first should read through your financial paperwork to see what insurance the lien holder requires you to carry. If you cannot find in your paperwork what is required of your regarding car insurance contact your lien holder directly to get information.
If you are not required to carry full coverage on your vehicle, which would be rare for a finance company not to require this, then you may be able to reduce your coverage. However keep in mind if you caused an accident and damaged the vehicle you are paying on with only liability coverage then you will be personally responsible for paying for the damages to the car while still paying on the vehicle. Or it was totaled out you would end up paying on a car that you could no longer operate.
Get instant car insurance quotes here with us.