When insurance companies began underwriting automobile insurance they soon realised that in order to prevent undue loss, the assured had to be willing to cooperate after the accident occurred. So the indemnity insurance policy was born.

Insurance companies understood that human frailty might cause a policy holder to be less than diligent when obtaining witnesses to the accident and might even collude with a third party in order to get a recovery against him. This was recognised by the courts and one early judgement in 1919 noted,

One question often asked is whether an auto insurance policy has to be in the same name as that of the car loan. The simple answer to that is “Yes!”.

The official name for the need to have the car loan name and the auto insurance policy holder’s name the same is the Lien Holder’s Insurance Indemnity Clause. This clause insists that the names match and that the auto insurance is a full coverage policy (also called a comprehensive policy). This means that you must have comprehensive coverage from the insurance company so that your vehicle and your loan are both protected.