Of all the hazards that can befall a car owner, one of the most surprising may be wrongful repossession. That is, a repossession made in error on the part of the party taking possession. This can take place through misfiled paperwork, bad information or simple human error. This hazard might not be incredibly common, but it does happen. If it does, will your auto insurance policy have you covered?
Will Liability Cover It?
Your car insurance policy probably does not cover wrongful repossession. But it doesn't really need to.
If your car is wrongfully repossessed, all you need to do is find out who has it. You can typically do this by calling your dealership or lender. Then, provide the proper paperwork to prove that you do own the car, and that you are up to date on your payments. The costs involved in reclaiming your wrongfully repossessed property shouldn't be any more than whatever it costs you to make the call or trip to prove ownership.
Why Repossession Agencies Often Have Coverage
A wrongful repossession can be incredibly expensive for the people who repossessed your car. These parties might have wrongful repossession protection in place to make sure that they're covered should a car owner choose to sue them. This is similar to how a tow truck company’s liability insurance will often cover repairs if your car is damaged in the process of being towed. In the event that some compensation is owed and someone is refusing to cover it, your auto insurer should be able to help you cover any legal costs in seeking restitution.
While wrongful repossession can be a major inconvenience, it is not the same as having a car stolen or totaled. You should be able to come through the whole process without seeing a bump in your rates.