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In AB, what should I know about insurance requirements for car loans?
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Car Loan Glossary • ab

In AB, what should I know about insurance requirements for car loans?

In Alberta, securing a car loan involves specific insurance requirements beyond the provincial legal minimums. While basic third-party liability insurance is mandatory for all vehicles on the road, protecting against damages or injuries you might cause to others, lenders for financed vehicles will invariably require comprehensive and collision coverage. This is critical as it protects their asset - your vehicle - against risks like accidents, theft, vandalism, fire, and natural disasters. In the event of a total loss or significant damage, these coverages ensure the vehicle can be repaired or the outstanding loan balance can be settled, safeguarding the lender's investment and your financial obligation. Moreover, particularly in the evolving 2025 market where vehicle depreciation can sometimes outpace loan repayment, consumers should strongly consider Gap insurance; this covers the difference if your car is totaled and its actual cash value is less than what you still owe. Lenders will demand proof of these coverages before funding the loan, and failure to maintain them can result in expensive force-placed insurance or even repossession, underscoring why understanding these requirements is vital for your financial protection.

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