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

In Ontario, while provincial law mandates a minimum of third-party liability insurance for all vehicles, lenders financing a car loan will invariably require additional coverage to protect their investment. Specifically, you will be required to carry both comprehensive and collision insurance. This is because the vehicle serves as collateral for your loan, and lenders need to ensure it's protected against potential damage or loss from events not covered by basic liability, such as accidents where you are at fault, theft, vandalism, fire, or natural disasters.

Failing to maintain this full coverage throughout the loan term is a breach of your loan agreement and can lead to serious consequences, including the lender purchasing force-placed insurance at your expense (which is typically more costly and offers less coverage for you) or even repossession of the vehicle. As we look towards 2025, insurance premiums continue to be a significant component of vehicle ownership costs in Ontario, so it's crucial to factor these requirements into your budget and obtain quotes before finalizing your loan. Providing proof of adequate insurance is a prerequisite for loan funding, ensuring both you and the lender are protected against unforeseen circumstances and potential financial hardship.

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