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Proof of Insurance: Is It Needed to Refinance My Car?

Proof of Insurance - Is It Needed?
Susan Guillory

Susan Guillory

Updated July 19, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you’re looking to refinance your auto loan (and potentially lower your rates and/or payments), you will likely need to present proof of car insurance as part of the application process. What exactly is proof of insurance? It’s a card or letter that states you have current and valid auto insurance up to the state minimum. Before you start going down the road to refinance, here’s everything you need to know about proof of insurance — what it is, how to get it, and why you need it. 

What Is Proof of Insurance? 

Proof of insurance is an important document issued by your insurer that states you have an active car insurance policy. The information included can vary, but proof of insurance typically contains:Your car insurance card may also show confirmation that your policy meets your state’s minimum requirements.

What Is a SR-22 Certificate?

An SR-22 certificate is a form that is filed with your state to show that you are meeting your state's minimum auto liability insurance requirements. Not everyone needs an SR-22. Laws vary by state, but in general, drivers may need to have their insurance company file an SR-22 form with the state department under the following circumstances:
  • Conviction for driving under the influence 
  • Serious and/or repeat traffic offenses
  • An at-fault accident with no insurance

What Counts as Proof of Car Insurance?

The document used as proof of insurance might be a physical ID card, a PDF of the ID card you can print, or a digital card accessed through a mobile app. Law enforcement in every state except New Mexico will accept proof of insurance on a mobile app. You may also be able to use a proof of coverage letter from your insurance company that has details about your policy as proof of insurance.

Why Do I Need Proof of Insurance? 

There are several situations in which you need to show proof of insurance, including:
  • If you are pulled over by law enforcement
  • If you are in an accident and need to exchange insurance information
  • If you are registering a newly purchased vehicle or renewing your license plate at the Department of Motor Vehicles (DMV)
You will also likely need to show proof of insurance if you are applying for a new auto insurance policy, whether it’s to finance or refinance a vehicle. Why is this necessary? Lenders generally want to make sure that insurance will protect their investment, since they also own the car until you fully pay off the loan. Otherwise, if the car is damaged or totaled, the lender would have to get the money from you for repairs or to replace it, which is typically much harder than having the insurance company pay for it.

Failure to Show Evidence of Insurance

What happens if you don’t have proof of insurance? The consequences will vary but, assuming you are insured, they are usually relatively mild. If you’re pulled over by the police for a violation and do have coverage but don't have your card on you, you will likely be given a certain timeframe to prove that you are covered. If you later show proof of coverage, you might have to pay a small fine or, possibly, no fine. Fines are generally higher if you are not carrying proof of coverage at the time of an accident.Most states don’t put failure to show proof of insurance on your driving record, but if you are in a state that does, your insurer could slightly raise your rates or remove your safe driver discount. Some insurers will let the first incident slide, but will impose consequences if it happens a second time.If you actually don’t have car insurance, the consequences get more serious. You may have your car impounded or your license suspended. And, if you get pulled over multiple times without car insurance, you could possibly go to jail. If you are at fault in an accident, you may be responsible for all costs.

Fake Proof of Insurance

You can buy almost anything online, and that includes fake proof of car insurance. Doing so, however, is a very bad idea. Driving without insurance is illegal in most cases and results in a ticket and fine. And, police officers have access to a database that allows them to immediately verify your insurance. Presenting a fake insurance card could constitute insurance fraud and lead to a much steeper penalty. 

Do You Need Proof of Insurance to Refinance a Car?

Typically, yes. If you’ve weighed the pros and cons of vehicle refinancing and decided it’s the right fit, you’ll want to make sure you have proof of insurance on the car before you apply for refinancing. At a minimum, lenders typically want to make sure that your insurance complies with your state’s laws. In many cases, however, they will require that you have “full coverage” on your car to approve you for a refinance. This includes liability insurance, collision insurance, and comprehensive insurance. You will also need to maintain that coverage for the duration of the financing. Should you drop the required auto insurance coverage, it will be considered a violation of your finance contract and could put your loan in jeopardy. Also, the lender could place single interest coverage (also called force-placed insurance) on the vehicle and add the premium to the loan.Recommended: When Is the Right Time to Refinance a Car?

How to Get Proof of Insurance for Your Car

There are several ways to get proof of insurance for your car:
  • By regular mail Your insurance will typically mail you several copies of your paper insurance card when you start a new policy. If you’ve misplaced your cards, you can call up your insurance company and ask them to mail you some additional cards.
  • Via email If you need to get your card quickly, you can ask your insurer to email you a copy of your insurance card. You can then print that out and keep it in your wallet or car’s glove compartment. 
  • Through an app Many insurance companies now allow you to access your insurance card through their mobile apps. That means that if you need to show your card but don’t have it handy, you can simply open up the app and display the card on your phone. 

What Does an Insurance Card Look Like?

Proof of insurance typically looks like a wallet-sized card with a set of information that includes the name of the insurer, name of the insured, the policy number, and term of policy. It can also be a print-out of an insurance card, or be shown on your phone through an app or website.

Proof of Car Insurance Letter 

Proof of car insurance letters from your insurance company also count as proof of insurance. This will contain the same information as the car insurance card, but in letter form. This can typically be used in lieu of an insurance card for an auto loan refinance application.

Other Documents Needed to Refinance a Car Loan 

In addition to your proof of insurance, you will need to supply other information and documents to apply for an auto loan refinance. These often include:
  • Driver’s license
  • Pay stubs from your current employer or proof of employment
  • Your Social Security number
  • Vehicle identification number (VIN)
  • Make, model, and year of car
  • Vehicle registration
  • Current loan information (including the name of your current lender, your loan account number, monthly payment, interest rate, and remaining balance)
Recommended: How Many Times Can You Refinance a Car? 

The Takeaway

Shopping for a better auto loan — and refinancing your current car loan — is typically a simple and straightforward process. However, before you apply for an auto loan refinance, you’ll want to make sure you have proof of car insurance. Proof of insurance is a paper or electronic card issued by your insurance company stating that your car is currently and adequately insured. If you don’t have one, you can get proof of insurance by contacting your insurance company.If you’re interested in refinancing an auto loan, Lantern by SoFi can help streamline the process. With our easy online lending tool, you can quickly compare offers from multiple auto refi lenders with one short application and without making any type of commitment.
Photo credit: iStock/Valerii Apetroaiei
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Frequently Asked Questions

What is proof of insurance?
How do I get proof of insurance?
Why do I need proof of insurance?

About the Author

Susan Guillory

Susan Guillory

Susan Guillory is the president of Egg Marketing, a content marketing firm based in San Diego. She’s written several business books, and has been published on sites including Forbes, AllBusiness, and Cision. She enjoys writing about business and personal credit, financial strategies, loans, and credit cards. Follow her on Twitter @eggmarketing.
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