Reader’s Question:

If I co-sign for an car loan in Clifton, New Jersey and the primary on the loan does not carry auto insurance, will I be responsible in the case of an accident?

Ben

Clifton, NJ

If you co-sign on a loan in Clifton, New Jersey it is likely that you could be held responsible if there was an accident and the car was not properly insured. As a co-signer you are partly responsible for those who drive the vehicle and what happens while they are driving by what is called vicarious liability.

The financial institution that is the lien holder on the car will usually require collision and comprehensive coverage above the state’s mandatory liability auto insurance. This way their investment is the car is protected. If the insurance lapses on the car they might decide to take out insurance on the car themselves and add the cost, which will be high, to the loan.

Tags: auto insurance