To add teen daughter to auto policy the insurance agent says I need to change one of our vehicles to a liability only policy for $5000 per year; can I do this if both our vehicles have a loan lien? 
When you have a loan on a vehicle , your loan contract will require you to carry coverage on the vehicle itself which is known as physical damage coverage . Physical damage comes in the form of comprehensive and collision . In general , collision is anything you collide or have an upset with and comprehensive is everything else . Basically , the lienholder wants their interest protected which is the car . When a lienholder is listed , the insurance company is obligated to let them know if this coverage is dropped . If the coverage is removed , the lienholder , contractually , has a right to obtain coverage on its own and to add the cost to the amount of your loan . Adding teen drivers to a household can be expensive since they are inexperienced behind the wheel and are statistically more likely to have an accident . Check with your agent to see if any additional discounts are available with a youthful driver . For example , many companies offer a good student discount if the teen driver averages a B or better in school . 