Yes, you can technically get minimum coverage on a financed car, but you absolutely should not. Your lender will not allow it. When you finance a vehicle, the lender holds a financial stake in the car (the lien) until you pay off the loan. To protect that investment, they require you to carry more than your state's bare-minimum liability coverage. This almost always includes comprehensive and collision coverage, which pay for damage to your own car from accidents, theft, or other incidents.
State minimums, like California's 15/30/5, only cover damage you cause to others. They do nothing to protect the lender's asset—your car—if it's wrecked. The lender's requirements are outlined in your loan agreement. Failing to maintain the required coverage can lead to the lender force-placing expensive insurance on your car and adding the cost to your loan, a process known as force-placed insurance.
Here’s a comparison of typical state minimums versus typical lender requirements:
| Coverage Type | Typical State Minimum (e.g., CA) | Typical Lender Requirement | Purpose |
|---|
| Bodily Injury Liability | $15,000 per person / $30,000 per accident | Same as state minimum | Covers others' injuries you cause |
| Property Damage Liability | $5,000 per accident | Same as state minimum | Covers damage to others' property |
| Comprehensive | Not Required | Required (often with a deductible) | Covers your car from theft, fire, vandalism |
| Collision | Not Required | Required (often with a deductible) | Covers your car in an accident |
| Gap Insurance | Not Required | Often Strongly Recommended | Covers the "gap" between car's value and loan balance |
The goal is to protect both you and the lender from a total loss. For instance, if your car is totaled and you owe $18,000 but it's only worth $15,000, standard collision coverage pays the $15,000. Gap insurance would cover the remaining $3,000, preventing you from having to pay off a loan for a car you no longer have. While it adds to your monthly cost, this higher level of coverage is a non-negotiable part of a car loan.
