Looks like a sticky wicket. If you drop her insurance and she has none and negligently totals the car and kills a bus load of medical students -- can you pick up the tab? Will you give her notice that you are terminating the policy? Will policy termination result in the breach of the note, note acceleration and can you pick up that tab? If you terminate the insurance and she has insurance; but, it lapses will you get notice? What if she just pays you for paying for her insurance? Then you get paid, you know she's insured and you can sleep at night?
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There are two issues. First, who is the title owner of the vehicle. If you are listed on the vehicle title and she has a wreck, you could be held liable, so keeping insurance would be wise.
Second, what are the provisions of the note you have on the loan? Does the note require you to keep insurance? It probably does and if you don't gives the creditor the right to obtain insurance at your expense (and that will not be cheap) or places you in default and accelerates the note to be due in full.
As the other attorney suggested, the best solution may be to have her agree to pay you for the cost of insurance and you continue to carry the insurance.
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