How to return car loan insurance? Is life insurance required for a car loan?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Car loan is considered to be a demanded offer of banking institutions. It is offered to people who are planning to buy a new car, but do not have the necessary amount of funds for these purposes. Such a loan is offered on different conditions, which depend on the bank to which citizens apply. But each credit institution requires borrowers to purchase a comprehensive insurance policy and life insurance. These policies protect against numerous insurance risks, although they have a significant cost. Policies are bought for the entire loan term, but if the loan is repaid ahead of schedule, then each borrower has a question about how to return insurance for a car loan for life insurance. The procedure is considered quite simple, since for this you only need to contact the insurance company with an application and other documents.

Types of insurance policies

When applying for a car loan at Sberbank or another banking institution, each person must evaluate the proposed conditions, since in most cases they are significantlyvary from bank to bank. Employees of credit organizations take into account the age and income of a citizen. But in addition, they require the purchase of insurance policies. Required insurances include:

• Casko insurance. It is a property insurance, so banks may legally require the purchase of this policy. If a citizen refuses to buy, then he will not be able to count on receiving the required amount to purchase a car. The amount of the fee depends on the value of the purchased car.
• Life and he alth insurance. It is imposed by all banking institutions, although it is not mandatory. People quite often complain that life insurance was imposed on them with a car loan. It is not required by law, so borrowers can immediately cancel the policy during the cooling period. At the same time, the bank cannot increase the interest rate or change other lending conditions.

When applying for a car loan, you have to sign a large number of documents. At the same time, people simply do not realize that they are signing not only a loan agreement, but even an insurance agreement. If insurance is sold by a bank, then it can only act as an additional service of a banking institution, so it is simply impossible to refuse it in a standard way.

Types of insurance contracts

Return of car loan insurance is possible, but first you need to find out what type of insurance policy was purchased by the borrower. It can be made collectiveor individual insurance contract.

The collective agreement is drawn up not only between the buyer of the car and the insurance company, since an additional participant is a banking institution. Under such conditions, a citizen does not receive an insurance policy in his hands, since he only draws up an application for participation in collective insurance. The bank is the beneficiary under this policy. At the same time, it is simply impossible to refuse such insurance, since it is part of the loan agreement.

Personal insurance involves drawing up an agreement between the borrower and a specific insurance company. A person receives a standard auto insurance policy from the firm, and often the direct borrower acts as the beneficiary. It is he who will receive compensation from the company in the event of an insured event specified in the agreement.

Can I get car loan insurance back?

The possibility of a refund depends on the rules and features of the insurance contract. If a collective agreement was chosen, then you will have to apply for funds to the bank, although in most cases there is no way to return the money. This is due to the fact that insurance is only an additional service of the bank, so it is not subject to the cooling period.

If an individual contract was drawn up between the borrower and a separate insurance company, then by law, any person during the cooling period can refuse insurance and return the funds. This can be done right aftercar loan processing. But often the loan agreement provides for the possibility for the bank to increase the interest rate if the borrower refuses to buy the policy.

Refund Cases

Any person before buying an insurance policy should know whether it is possible to refuse car loan insurance. The payment for such a policy is considered quite high. In addition, you will have to buy insurance annually until the end of the loan period.

How to return car loan insurance? The procedure can be performed legally in the following situations:

• the owner of the vehicle changes if the bank agrees to sell the collateral;
• the car was stolen or completely destroyed as a result of an accident or other similar situations;
• causing auto damage, which led to the inability to continue to use the car for its intended purpose, but the exception is recycling;
• death of the owner, as a result of which the heirs become the owners of the property;
• if insurance was issued for a company, then after its liquidation the policy becomes invalid;
• an insurance company loses its license to operate in the relevant area, but the owner of the car must hurry to be included in the register of creditors.

Every citizen who owns a car can dispose of it at his own discretion, if there are no encumbrances. It is allowed to sell a car even with insurance. In this case, the price of the car is increased by the cost of the insurance policy. ATthe insurance company is reissuing the contract for the new owner of the car.

How is the money returned?

If a person is sure that he has the right to receive compensation from the insurance company, then you need to figure out how to return car loan insurance. The procedure is considered quite simple and understandable, but it is possible in three cases:

• a person decides immediately after applying for a car loan to refuse insurance, realizing the negative consequences of purchasing a policy, therefore, he applies to the insurance company with a statement during the cooling period;
• unforeseen circumstances arose as a result of which a person has the right to return his funds, for example, if the car was destroyed;
• a person repaid a car loan ahead of schedule, so he can return some of the funds transferred to the insurance company for insuring his life on a car loan.

There are different actions to take in each situation.

Refund during the cooling period

You can return money for life insurance on a car loan during the cooling period, which since 2018 is 14 days. This is possible for a life insurance or casco policy. To do this, a citizen performs the following actions:

• within 14 days after signing the insurance contract, you need to contact the insurance company;
• an application is being made to refuse the services of the company;
• attached to it other documents,submitted by a copy of the citizen's passport, a previously signed insurance contract and a direct policy;
• based on this application, the company terminates the contract and returns the previously received funds.

A company, by law, has no right to refuse a citizen to return money. Therefore, if a person wants to return car loan insurance, then specific actions must be performed immediately after receiving a loan. But first you should study the content of the loan agreement. Often, banks for such actions of the borrower increase the lending rate or even terminate the contract ahead of schedule, demanding the return of previously issued funds.

Occurrence of unforeseen situations

The insurance contract is terminated upon the occurrence of insured events, for example, upon the death of the borrower or the destruction of the car. If such a situation really arose, then the car owner must do the following:

• applying for some part of the cost of insurance;
• the application indicates the circumstances under which the policy is terminated;
• attached documents confirming that the car was sold or broken.

Not the entire amount is returned, but only a certain part, which depends on when the insurance policy expires.

Loan early repayment

If a person took out life insurance when receiving a car loan at Sberbank or another bank, then after early repaymentof this loan, he is en titled to expect the return of some part of the previously transferred amount for the policy.

To receive money, the following actions are performed:

• first you need to repay the car loan in full;
• the bank takes a certificate of no obligation;
• an application is being made for the recalculation of the fee for the insurance policy;
• a certificate from the bank is attached to it.

Is life insurance required for a car loan? Such a requirement is not mandatory by law, but almost all banks require their borrowers to purchase such an insurance policy. If a person refuses, then he simply does not receive funds to buy a car. But if the borrower refuses insurance after signing the loan agreement, the bank will not be able to hold him accountable.

When do funds arrive?

You can return money for life insurance on a car loan in different situations. To do this, a citizen must independently perform some actions aimed at obtaining funds.

Money is paid within a maximum of 15 days after the application is made. Directly in the application, the details of the bank account to which the money should be transferred are indicated. However, only the amount for unused months is paid.

Rules for making an application

Quite often, banks require their customers to take out life insurance for car loans. How to get money back in case of early repayment? In this caseyou need to make a good application. It contains the following information:

• borrower's personal data;
• requirement to return a certain part of previously paid funds;
• reason for refund.

Companies do not have the right to refuse their customers, so they must recalculate and pay out funds.

Conclusion

When applying for a car loan, banks require their borrowers to obtain insurance. Casco and life insurance required. In certain situations, citizens have the right to return some of the money transferred to the insurance company. The entire amount can be returned if you contact the company during the cooling period.

To receive your funds, you will have to directly contact the insurance company with an application and other documents.