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

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

In Prince Edward Island, securing a car loan necessitates understanding specific insurance requirements. Legally, all registered vehicles in PEI, like the rest of Canada, must carry liability insurance to cover damages or injuries you might cause to others. However, for financed vehicles, lenders universally mandate comprehensive and collision coverage. This is because the lender retains a financial interest in the vehicle until the loan is fully repaid, and these coverages protect their asset against damage from accidents, theft, vandalism, or natural disasters. In the 2025 market, insurance premiums are a significant factor in vehicle ownership costs, so it's crucial to budget accordingly and compare quotes. Failing to maintain the required comprehensive and collision insurance can result in your loan being declared in default, potentially leading to the lender purchasing costly "force-placed" insurance that only protects their interest, not yours. Always confirm the specific coverage limits and deductibles with your lender and insurance provider to ensure full compliance and adequate protection.

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