Is CASCO insurance required for a car loan?

CASCO is a voluntary car insurance that helps the owner protect his vehicle from various risks, such as theft, traffic accidents (including due to the fault of the driver), natural disasters, fires and other unforeseen situations.

Unlike compulsory civil liability insurance (Compulsory Civil Liability Insurance of Motor Vehicle Owners), which covers damage caused to other road users, CASCO compensates for losses connected with damage or loss of the insured car itself.

 

Is CASCO insurance required for a car loan?

Bank can provide for mandatory CASCO insurance in a loan agreement in order to protect itself from loss of the pledge. This condition is due to the fact that the car remains pledged to the bank until the loan is fully repaid. Thus, insurance protects both the bank and the car owner. At the same time, the bank does not have the right to limit the client in choosing an insurance company.

 

Is it possible to get money back if repaid ahead of schedule?

 

Before signing a CASCO agreement, it is important to carefully read all its terms and conditions, including the procedure for early loan repayment.

Insurance contract can be terminated ahead of schedule if, for example, the insurance object ceases to exist (such as the insured car) or the risk itself for which the insurance was taken out disappears – for example, when the loan is fully repaid and the car is released from pledge.

In case of early termination of the contract, the insurer has the right to withhold a portion of the insurance premium proportional to the period during which the insurance coverage was in effect. As a rule, if the policyholder refuses the contract, the paid premium is not returned, unless otherwise is provided for by the terms and conditions of the contract.

Moreover, if the contract is terminated within 14 calendar days after it is entered into, the insurer has to return part of the insurance premium minus the cost of the period during which the insurance was already in effect, but not more than 10% of the total amount of the insurance premium.