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What is credit insurance on a car loan?

I want to get a car loan, and the lender told me to consider credit insurance. What does this mean?

Eric Schad · Updated on Nov 8, 2021

Reviewed by Shannon Martin, Licensed Insurance Agent.

Very simply, credit insurance on a

is a product that makes your car loan payments if you can’t. Most credit insurance policies will continue payments in the event of your:

Death (pays the balance of the loan)

Disability

Involuntary unemployment

On average, credit insurance costs approximately 2% to 4% of the amount borrowed. If you’re employed in a line of work that has job volatility or is deemed dangerous, the price might be worth the investment.

When you get a car loan, you should also consider other products that protect you from financial distress.

Collision coverage

and

comprehensive coverage

are required by your lender. But you may also want to add

, which pays the difference between your loan balance and the value of the car if it’s totaled in an accident.

Whatever insurance products you decide to buy, shop around with

. Sign up in less than a minute to compare quotes from dozens of top-notch, reputable car insurers.

MORE:

New car insurance: What coverage do you need when buying a new car?

View full answer

WHY YOU CAN TRUST JERRY

Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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