Must you keep insurance on a car you're letting go?

[jribe]

Hi all,
I was just wondering- we have one car that we plan to stop making payments on- and let them repossess it (and include in the bk). Do we have to keep the auto insurance on it? We won't be driving it at all, it will just be sitting outside; for easy pickup. If we do have to keep it insured, does anyone know the reason?
Thanks!

[Nicollette]

I have a friend that is going through the same thing right now. She's surrendering a car, and she's not driving it at all. It's just sitting in her driveway. Her attorney advised her that since it's not being driven, she could drop the "collision" on it, but to keep the "comprehensive" because that would cover vandalism, theft, etc., while it's sitting there waiting to be picked up.

[jribe]

i understand that.. But since i'm planning to file for BK - if something does happen to the car, what can they do about it? I don't live in a bad area, but say a rock hits the window or something; i wouldn't report it anyway. I'm just wondering if there is any consequence for not keeping it.

[justbroke]

You need to keep the vehicle insured.

If you're not operating the vehicle at all (not moving it even to get it out of the way), then you could possibly drop collision.

However, you are responsible for the full value of the collateral. You really need to keep comprehensive and liability in case something strange happens.

[justbroke]

i understand that.. But since i'm planning to file for BK - if something does happen to the car, what can they do about it? I don't live in a bad area, but say a rock hits the window or something; i wouldn't report it anyway. I'm just wondering if there is any consequence for not keeping it.

The problem isn't with loss of the value of the vehicle, as that's being discharged.

If you decide to move it out of the way, and strike something (stationary object, a moving car, a person), then you will be in more trouble than you think. You need insurance coverage to be protected. Your Bankruptcy (if filed after the incident) could discharge that... but it's still more questions than answers.

You can take the chance by dropping it, but it's the liability issues which bother me with your decision.

I guess I'm a safety guy. I don't like to take any chances.

[shabam]

The other angle you may want to consider is that if you know you plan on filing and the car is totaled, then you would most likely be responsible for the replacement cost. The car is the creditors asset after all.

I would not risk it and would only cancel the policy once the creditor has the vehicle in their possession.

[okiebk09]

so our truck will be picked up/given back in the next week or so. when would you recommend that i drop coverage?

[justbroke]

so our truck will be picked up/given back in the next week or so. when would you recommend that i drop coverage?

The day they pick it up or the day your surrender it. Make sure you get some sort of receipt for the vehicle so you have the official date and time it was picked up/surrendered.

[okiebk09]

good advice thanks.

[Intoodeep80]

When I retained my lawyer in August, they told me since I was surrendering my vehicle to drop all insurance on it. The logic is, once you tell the bank you have no insurance on it, it makes them come repossess it more quickly. Has that happened? No. I havent driven it since August, well I did move it once, so that it was easily accessible should they come to get it.

[Bell30656]

Picture this... the vehicle is stolen out of your driveway and used in a horrible Grand Theft Auto inspired spree... Who is going to get sued for the huge amounts of damages? Or the vehicle slips out of gear, rolls down the driveway into your neighbor's house... It's a good idea to keep insurance on it until it leaves on that repo truck.

[TEW]

call the bank and tell them to come get it then you can drop the insurance. you don't need to wait for them to come get it they will be there in a day or so

[shabam]

so our truck will be picked up/given back in the next week or so. when would you recommend that i drop coverage?

A soon as it's on the tow truck it is their responsibility. I would get something on paper that they picked it up.