If you do not have auto insurance does the creditor have to put insurance on the auto?

Answer 1

If you want to know if the creditor must put insurance on your car. The answer is No. They don't have to do it, it is your car and it is your responsibilty to do so. Apart from being the law in most states as to certain types of coverage, it just makes good common sense. (and financial sense too!)

Generally, the loan contract that documents the money borrowed for the car will state that you will keep the car insured for physical damage (generally, collision and comprehensive coverage). This is important from the lender's standpoint, because the insurance provides a source of funding for the repair of the vehicle and therefore preserves the value of the collateral that secures the loan. In that regard, if you as the borrower do not present proof that the insurance requirements have been met, the lender will generally have the right to acquire physical damage coverage to protect its interest. The lender will usually initially pay for it but add it to the balance that you owe on the loan.