When financing a new vehicle, can a dealership add on disability insurance as a requirement to purchase?

Get Legal Help Today

 Secured with SHA-256 Encryption

When financing a new vehicle, can a dealership add on disability insurance as a requirement to purchase?

Asked on July 26, 2011 Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, the dealership may add this, as long as it is discussed or required prior to your signing the contract to buy the vehicle. Selling anything is a voluntary act; sellers may add requirements or conditions to protect legitimate interests. Since your disability could prevent you from paying the financing on your vehicle, it is a legitimate request that you have disability insurance to ensure that the car will be paid for if you are disabled. Again, though, they must ask for this "up front"; if you've already agreed to buy the car, they cannot after the fact add an additional requirement of which you were unaware when you signed. However, by disclosing this up front, prior to agreeing to buy the car, you have the chance to walk away and buy from a different dealer, if you choose.

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The lender that you want to finance the car's purchase can legitimately require that you place a disability insurance policy as a condition for the loan where it would be the beneficiary if you become disabled and cannot make the car's monthly payments.

The lender has a legitimate interest in making sure that its payments you owe to it over time for the car will be paid on time. The requested disability insurance policy is a reasonable request of you and such policies placed in car loan situations as yours are customary.

You can try and negotiate around the requirement of the disability insurance policy. However, the dealership can remain firm in its demand. If so, it is up to you to make the final decision o the required policy.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption