If you’re financing – that is, if you are borrowing – you also be paying for full-coverage policy that is based on the full replacement cost of the vehicle.

This is entirely reasonable – and justifiable – from the standpoint of the lender, who is in fact the actual owner of the vehicle you’re making payments on every month. (If you doubt who the actual owner is, irrespective of the name on the title, see what happens when you stop making those payments on what isn’t your vehicle until after you’ve paid off what you owe on it.)

If you wreck their vehicle, the lender would be left holding the bag. Hence the requirement – a condition of the loan and your conditional possession of what is not your vehicle in fact – irrespective of the etymological fiction – that you pay for a policy that will pay out whatever it takes to either repair the vehicle or replace it.