Friday, October 21, 2011

Johnson Insurance - Auto Lessors And Lenders

Johnson Insurance

Regardless of where in the United States you live, if you are leasing a car or a truck or are making payments on a vehicle purchase loan, the leasing company or auto loan finance company will include as a contract provision the requirement that they be shown as an insured party on your automobile policy. Your auto lease or loan contract may even specify the minimum coverages you are obligated to maintain (typically collision and comprehensive coverages).

The lease or auto loan contracts often give the lessor or lender the right to place coverage to protect their interest in the event of loss (but not your interest) and to charge you for the cost of such coverage. This will happen unless you make sure that your auto insurer provides evidence of coverage at each policy renewal.

Usually, notifying your insurer is done at the time the lease or loan documents are signed, Many automobile dealers will not release a vehicle to a customer until the dealers have confirmation that your insurer has been informed of your lease or purchase of a new vehicle. It is often a dealership's finance department that undertakes this notification, based on information supplied by the customer.

However, it is usually a better practice for you to call your insurance agent and personally provide him or her with the new vehicle purchase or lease information, It is better to take the responsibility to handle the notification yourself and to make sure it is done right.
Johnson Insurance

Even if you do not have all the information needed (such as the correct legal name of the lender or its address), you can at least tell your agent the name of the dealership, its telephone number, and the name of the correct person at the dealership to contact in order to obtain the financing and additional insured information necessary. This will guarantee that the auto leasing company or automobile finance company is properly included as an insured party under your automobile policy.

If you are trading in a vehicle as part of the transaction or if you have sold it in a private party transaction, you will need to call your agent to advise him or her of that change to the policy. Also, if you pay off any outstanding loan balance, then you will need to notify your agent that the prior lender should be deleted from your policy.

When in doubt, more notice to your agent (i.e., both from you and from the auto lender) can never hurt. It is only a failure to give notice or complete and accurate information to your agent that can lead to trouble.


As individuals, your mortgage (including home equity lender) and auto lenders are the most common entities you will need to assure are added as insureds under your insurance policies. If, however, you run a business and have policies for your business, you may encounter circumstances in which you need to add other persons or companies to coverage as insureds under your policies.


The preceding sections deal with additional insured interests under policies covering items of real and personal property. There are circumstances, usually limited to commercial policies, in which a policyholder may need to add another person or business as an additional insured under the policies' liability coverages. Common situations in which this can occur include a wide variety of circumstances.

  • Construction contractors may be obligated under contracts with property owners for whom the contractors are performing services to add the owner as an additional insured under the contractors' policy for liability arising out of the contractor's work for the owner. Similarly, construction subcontractors maybe contractually obligated to add the developer or general contractor they are performing services for as an additional insured for liability arising out of the subcontractor's work. Johnson Insurance
  • Persons who lease business premises may be obligated to add the owner of the premises as an additional insured for liability arising out of the use and occupancy of the premises pursuant m the lease.
  • Churches and charitable organizations may obtain additional insured endorsements extending coverage to officers, trustees, board or vestry members, or volunteers in other roles, while they are acting in their respective capacities for the church's or organization's activities.
There is a wide variety of standard form additional insured endorsements, including, in some cases, more than one form that may apply to a particular situation. If an inappropriate version of such an additional insured endorsement is obtained, the person or company to whom you owe the obligation to procure additional insured status may not receive the expected coverage. It could result in that person or company turning to you personally for the costs of the defense in the event of lawsuit or for paying a claim in the event of a loss that would have been covered if the correct form of additional insured endorsement had been employed.

It is beyond the scope of this blog to detail all the different types of additional insured endorsements available or to detail when a particular form of additional insured endorsement is more appropriate than another in a given circumstance. In order to help ensure that you obtain the correct additional insured coverage for your particular circumstances, it is important that you provide as much information as possible to your agent or broker. This may
include copies of your leases or contracts with parties who require additional insured status under your policy. 

This will help to assure that the correct or most appropriate additional insured endorsement is added to your policy and that the person or other company added as an additional insured is correctly specified. It is also important to specify the activities for which additional insured status is sought so the additional insured is not receiving coverage that is broader than that required by the terms of the lease or contract in question.

Finally, for some persons or entities that are receiving coverage as additional insureds under the policies of another person or company, it is necessary that they inform their own agent or broker of that fact, so that he or she can take appropriate steps to coordinate the coverages. Specifically, if a person or company is an additional insured under the policy of another, the insured may want that additional insurance to apply to claims or lawsuits as primary insurance. In those situations, it would want the coverage of its own policy to apply only as excess coverage, that is, only after exhaustion of its coverage as an additional insured under the other party's policy.

Hope you have better understanding about insuring other interests. To learn more, you can get Johnson Insurance and find out even deeper secrets of insurance.

Twitter Delicious Facebook Digg Favorites More