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What Is a Lienholder on a Car?

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A lienholder on a car is a loan lender that has a legal claim to your financed car. Because the lienholder is funding the loan, they have a legal interest in the vehicle until the loan has been fully repaid. A private individual, a bank or some other financial institution could be a lienholder.
 
Financing a car comes with a number of considerations regarding insurance. In fact, the type of insurance you need on your vehicle may depend on the requirements set by the lienholder on your car.

A Lien on a Car

Here’s how a lien typically works: When you borrow money to purchase a vehicle, the vehicle can be used as collateral to secure the loan. A lien protects the lender. 

Liens and Car Titles

The title to your car is a legal document of ownership, which the lienholder typically holds for the duration of the loan payment period. In some states, the lienholder’s name is printed on the title to protect their financial interests. When the loan is paid, typically, the lienholder releases the lien and signs the title over to you.

Lienholders and Car Insurance Coverage

If you finance your vehicle, you will typically need to have certain coverages included in your car insurance policy. Lienholders may include a clause in the contract that stipulates the type of insurance you need to carry on the vehicle. Comprehensive coverage and collision coverage are the two most likely types of insurance your lienholder may require.
 
You may want to consider loan/lease gap insurance to cover the difference between the actual cash value of your vehicle and the unpaid balance on your loan or lease if your vehicle is totaled due to a loss covered by your comprehensive or collision coverage.

How to Add or Remove a Lienholder from Your Car Insurance

You should always notify your insurance agent of any changes to your vehicle, including the addition or removal of a lienholder. To add or remove a lienholder from your car insurance policy:

  • Contact your insurance agent to provide the contact information for your lienholder. Be sure to have your loan account number on hand when you make the call.
  • If you are adding the lienholder, find out what, if any, coverage your lienholder requires and communicate that information to the insurance company.
  • If you are removing the lienholder, review your policy with your insurance agent to be sure you have the appropriate coverage.
  • Ask your insurance company to send your policy information to the lienholder to be sure coverage is sufficient. You’ll want to contact the lienholder one last time to be sure all requirements are in place to their satisfaction.
     
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Types of Car Insurance Coverage

It’s important to know what’s included in your basic car insurance coverage, the policy limits and what, if anything, you may need to add.


Liability Coverage

Bodily injury and property damage liability coverage can cover injuries to others, damage to others’ property, and your legal expenses if you cause an accident.


Roadside Assistance

This coverage provides and pays for covered towing and labor costs if your vehicle breaks down.


See All Travelers Garage Content


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*Quotes may not be available in all states or for all products. In CA, quotes for all products must be obtained through a local independent agent.

The information on this site is general in nature. Any description of coverage is necessarily simplified. Whether a particular loss is covered depends on the specific facts and the provisions, exclusions and limits of the actual policy. Nothing on this site alters the terms or conditions of any of our policies. You should read the policy for a complete description of coverage. Coverage options, limits, discounts, deductibles and other features are subject to individuals meeting our underwriting criteria and state availability. Not all features available in all states. Discounts may not apply to all coverages and/or vehicles.


Insurance is underwritten by The Travelers Indemnity Company and its property casualty affiliates, One Tower Square, Hartford, CT 06183. In TX: Automobile insurance is offered by Travelers Texas MGA, Inc. and underwritten by Consumers County Mutual Insurance Company (CCM). CCM is not a Travelers Company. In CA: Automobile Insurance is underwritten by Travelers Commercial Insurance Company, Certificate of Authority #6519, State of Domicile: CT; or Travelers Property Casualty Insurance Company, Certificate of Authority #6521; State of Domicile: CT. Homeowners Insurance is underwritten by The Standard Fire Insurance Company, Certificate of Authority #3545, State of Domicile: CT.  In CA: Boat and Yacht insurance is underwritten by The Standard Fire Insurance Company, Certificate of Authority # 3545, State of Domicile: Connecticut. In WA: Automobile Insurance is underwritten by The Standard Fire Insurance Company. Homeowners Insurance is underwritten by Travelers Personal Insurance Company. Personal Article Floater Insurance is underwritten by The Phoenix Insurance Company and The Travelers Indemnity Company of America. Personal Liability Umbrella Insurance is underwritten by The Standard Fire Insurance Company, The Automobile Insurance Company of Hartford, Connecticut, The Travelers Indemnity Company of America, The Travelers Home and Marine Insurance Company, Travelers Commercial Insurance Company and Travelers Personal Insurance Company. Special Event Insurance is underwritten by The Standard Fire Insurance Company. Boat Insurance is underwritten by The Travelers Home and Marine Insurance Company. Yacht Insurance is underwritten by The Standard Fire Insurance Company, The Automobile Insurance Company of Hartford, Connecticut, and The Travelers Indemnity Company of America. All underwriting companies in CA and WA listed above are located at One Tower Square, Hartford, CT 06183. 

1 Save up to 10% on auto insurance when you buy a Travelers home insurance policy.

2 Early Quote, EFT, New Car, Safe Driver, Continuous Insurance, IntelliDrive®, Paid in Full, Good Payer and Multicar Discounts are not available in CA.

Pet Insurance, Motorcycle Insurance, and Travel Insurance is not underwritten by Travelers or its Affiliates (“Travelers”). Travelers utilizes its affiliate, InsuraMatch, LLC, an independent insurance agency, to refer consumers interested in pet coverage, motorcycle and off-road vehicle coverage, and travel coverage. For more information about the underwriting entities click “Learn More” to be directed to the specific product page.