Why does the bank require auto insurance with comprehensive cover?
The purchased vehicle is the collateral that secures the loan. Thus, it is very important to protect the vehicle against the risk of accidental damage and risk of theft. An auto insurance policy with comprehensive cover will provide such protection and give the borrower peace of mind. The driver would not be burdened with any liabilities to third party arising from an accident and the vehicle’s value is protected from damage or loss. If an accident were to occur, the insurance firm will pay for the damage, leaving the borrower to continue repaying loan to the bank.