I was the titled owner of a 2003 vehicle along with the finance co. my son was always the registered owner from the purchase time, He insured the vehicle all along w/collision coverage as required by the bank, In Jan/08 he renewed a policy and the young lady at the brokerage decided to save money he could drop collision coverage, there was still nearly 4800.00 owed on the loan in May/08 the vehicle was totaled (thankfully no injuries) I as the titled owner and the bank had no knowledge of the collision coverage being dropped nor did we give authorization for this to happen,My question is this allowed by law? And if not can I sue them (the broker in small claims) I am currently being held responsible and required to pay the entire balance to the bank, they told me if they had been notified by the insurance co. they would have replaced coverage and charged me for it, I filed a formal complaint with the state insurance dept. and I'm still waiting to hear But if anyone has any knowledge on this and could give any info I would greatly appreciate it ! Thank you very much

Didn't the bank have a lien on the title? That the car was financed should have been noted on the insurance (It is in NYS).

So its possible you have a case against the agent. I would wait until you see what the State Insurance Dept says. But I think you may have a case, especially in Small Claims Court.

The only caveat I see is that your son agreed to this. But dropping the collision should never have been offered.

Yes the bank was listed as lienholder on the title along with myself, He was not on the title and I feel should not be able to consent to dropping collision and signing any such waiver (this is in NY) I'm waiting to hear back thanks for your insight !

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Originally Posted by glu2706

Yes the bank was listed as lienholder on the title along with myself, He was not on the title and I feel should not be able to consent to dropping collision and signing any such waiver (this is in NY) I'm waiting to hear back thanks for your insight !

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That's the wrong tack to take. If the insurance was in his name then he could make the choices. But if this was NY, then the insurer or broker should have been aware that there was an outstanding loan. Therefore they should never have offered the choice, especially without informing the lender that the collision had been dropped. So the broker could be sued for negligence on both counts.

Again, the son, had to sign a form changing the coverage most likely, there would be new insurance cards sent out and a new policy. So the bank would have also gotten a notice of this.

If the son asked what he could change and he did this,
So the son was fully aware of what he was doing, and you gave him that permission to do so.

He made a poor legal choice, I don't see any suit against anyone,
But you and the son are liable for paying the loan off

My position would be; I never gave permission as the titled owner,and he never asked to change anything other than get the lowest possible price, I believe the lienholder must be removed from the title by dmv or a letter of satisfaction produced in NY in order to drop collision coverage(or at least that's the way it should be) Hopefully I will get a ruling from the state insurance dept. and I will post the outcome Thanks

I think that since your son was allowed to make decisions regarding the insurance he/you will be held responsible. The agent gave your son bad advice but he essentially made a decision to save money. He made a poor decision and didn't seem to clearly understand what he was doing and the possible ramifications.

Normally a notification is sent to the lienholder any time changes are made on the auto policy and they can contact you or the insurance company requiring certain levels of coverages be maintained/added back.

The key here is that the coverage was dropped nearly a year ago so you would've gotten new cards and bills reflecting the change.

NM - yes, that bothered me also having the coverage changed a year ago. Anytime I receive something from my insurance company I read it - every last line!

Apparently your son changed the policy to save money. The insurance agent should not have dropped collision since there was a lien on the vehicle, but that is not grounds for a lawsuit against the insurance agent.

The investigation was completed, I received a disbursement check today and the lien holder was paid in full ! The ins. co. was directed to cover the total loss for the time in question I had to pay the premium that would have been charged at that time, I'm now trying to get the bank to delete the charge off because this occurred through no fault of my own . If anyone has any ideas on how to go about this I would appreciate the help , Thanks to all for your helpful replies to this post

Thanks for reporting back to us and letting us know the outcome. You got lucky your company allowed you to pay the back premium in exchange for them covering the loss. They didn't have to do this so I'm glad it worked out for you.

You can start by writing a letter to the bank. You need something in writing requesting that they review the file. Explain what has happened with the insurance, accident, etc and that you'd like to have the charge-off removed. That will at least open up the lines of communication.

Thank you, although I'm not sure it was luck, evidently when there is a lienholder on the title, it is mandated that the bank receives notification when collision coverage is dropped and in this case the nys insurance dept found the insurer to be at fault, and required them to cover the claim, believe me they wouldn't pay if they could find a way not to!! Thanks very much for your help !

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Originally Posted by glu2706

Thank you, although I'm not sure it was luck, evidently when there is a lienholder on the title, it is mandated that the bank recieves notification when collision coverage is dropped and in this case the nys insurance dept found the insurer to be at fault, and required them to cover the claim, believe me they wouldn't pay if they could find a way not to !!! Thanks very much for your help !

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Well I certainly got this one right ;) And I agree it wasn't luck. That's what I said in responses #2 & 4. That the carrier is required to inform the lienholder of any changes in coverage. Their failure to do so made them liable in this case. Glad we could help.

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Originally Posted by glu2706

Thank you, although I'm not sure it was luck, evidently when there is a lienholder on the title, it is mandated that the bank recieves notification when collision coverage is dropped and in this case the nys insurance dept found the insurer to be at fault, and required them to cover the claim, believe me they wouldn't pay if they could find a way not to !!! Thanks very much for your help !

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Ahhh, this is key that they didn't notify the leinholder. Apparently I missed that. I thought that they had notified the leinholder and it went no further until the accident. Good catch Scott!

Glad it happened and you got paid

Thank you, although I don't think it was luck rather a mandate by the NYS insurance dept.if there was any way not to pay they would find it ! Thanks so much to all of you for your help!