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Collateral Protection Insurance


Collateral Protection Insurance


What is Collateral Protection Insurance ?

Collateral protection insurance is an insurance policy that protects auto loan lenders from financial losses resulting from having to pay claims when someone does not have auto insurance. Normally, when a borrower gets into a car accident, their auto insurance covers the damages.

What To Do If Your Lender Has Force-Placed Insurance on Your Property

Force-placed insurance, also known as creditor-placed, lender-placed or collateral protection insurance is an insurance policy placed by a lender, bank or loan servicer on a home when the property owners' own insurance is cancelled, has lapsed or is deemed insufficient and the borrower does not secure a replacement policy. This insurance allow the lender to protect its financial interest in the property.

A lender may also force-place flood insurance on homes in flood zones that they believe do not have enough flood insurance to meet the legal minimum required to protect the property.

If you obtain a loan to buy a car, you must have insurance to cover the car. If you fail to obtain insurance or let your insurance lapse, the lender likely has the right under the sales contract to force-place insurance on the car.

Force-placed insurance is usually a lot more expensive than what you can obtain by shopping for an insurance policy yourself. In addition, the lender-placed insurance policy may have limited coverage. For example, these policies generally do not cover personal items or owner liability.

What is CPI interest?

consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by households. ... It is one of several price indices calculated by most national statistical agencies. The annual percentage change in a CPI is used as a measure of inflation.

What is the meaning of policy in force?

While the concept of "policies in force" is applicable to all types of insurance -- including health, auto and disability -- it is most commonly used in regard to life insurance. From the perspective of a person who takes out an insurance policy, "inforce" simply means the policy is active at a given point in time

Collateral protection insurance program protects lenders against uninsured collateral losses.  Coverage is similar to our vendor single interest program but this program also provides the borrower some loss recovery benefits without the necessity of repossession.

Typically all loans in a given portfolio are tracked for primary insurance.  If borrowers fail to respond after a series of lender notices are sent an individual coverage certificate is issued with the premium added to the underlying loan balance.

Key CPI Features

  • Separate Borrower and Lender Master policies
  • Annual Certificates Issued
  • Wide range of collateral types eligible
  • High Limits available to protect varied lending targets

Optional Lender Coverages

  • Repossessed collateral coverage
  • Instrument non-filing errors and omissions
  • Confiscation conversion and secretion
  • Repossessed expense reimbursement
  • Mechanics Lien
  • Repossession Storage expense
  • Deficit unpaid balance protection