Why do you ask for my loan information?
If you purchase an item that is being insured and it has a loan – it is important that you tell us who the loan is with, their address, and the loan number (if it is available at the time of purchase).
If you have a loan on your vehicle or toy- your creditor will require that you have comprehensive and collision insurance (insurance covering the item) on your new purchase. They will also want to be listed on the insurance policy so that they are notified if you stop making payments on your insurance and if you have a claim they will be listed as one of the payee’s on any checks that are written to you.
Think of it this way- if you have a loan for your vehicle or toy- your creditor owns a portion of the item. They want to make sure that if something happens to it (ie- you are in an accident and the car is totaled!) that they get the money owed to them first before any money is paid to you. They certainly want to make sure that there is an insurance policy in the first place so that there is money in the first place.
If you fail to provide us with the loan information when you take insurance out on your new item- your creditor will most likely start sending you letters that say something to the effect of: “We notice that you do not have insurance on XXX item.”
Which of course, won’t be true- because you do have insurance on it- you just never introduced the insurance company to the lender.
And then the lender’s letters will say “Since you don’t have insurance on XXX item, we will place compensatory insurance on your XXX item” and then they will price you out an insurance policy that they will charge you for- that started the first day of your purchase. Oh- and note- that insurance policy will ONLY cover the vehicle itself. It is not liability insurance for if you hit someone. It is not the kind of insurance that you need to be legal to drive. Also- it will be more expensive than your regular insurance policy that covers both.
Usually, at this point, you will call your insurance agency frustrated that someone made a mistake.