Collateral Protection Insurance (CPI)
Collateral Protection Insurance (CPI) protects automotive finance companies in the instance that the collateral protecting their interest in the finance contract becomes uninsured. CPI is designed to help finance companies manage risk, keep customers on the road, and provide an alternative income source.
The Need:
American Risk Services' CPI program addresses the fact that most subprime and nonprime auto customers do not have insurance coverage upon entering a dealership. Since lenders require customers to provide insurance protecting the lender’s interest in the financed vehicle, customers will often purchase a binder (short-term coverage) in order to finalize the loan. However, this binder frequently lapses shortly after purchase due to non-payment, leaving lenders with uninsured loans. This exposes the lenders to potential physical damage losses, charge-offs, and the risk of losing customers.
The Solution – CPI:
- ARS' superior CPI program provides the finance company protection against physical damage or theft of the collateral, dramatically reducing damage-related losses and charge-offs.
- ARS’ intuitive web-based system known as ARSinsure™ is directly integrated with lender loan management systems for seamless, accurate, and timely automatic reporting of CPI activity.
- All CPI policies are written through “A” Excellent A.M. Best insurers that have policy forms, rates, and claims procedures filed and approved by State Departments of Insurance.
- CPI claims are reported via ARSinsure™ web-based system to assure accuracy and most claim payments are made in less than 3 days.
- In-person training provides a foundation of compliance and best practices for the lender to gain the most out of the CPI program. Ongoing management, robust detailed management reporting, and direct deep relationships drive the success of the ARS CPI programs.
The Benefits:
- Systematic and simple approach to assuring loan collateral is insured
- Fast claims service, usually less than 3 days for claims payment
- Increased lending margins through lower collateral losses and decreased charge-offs
- High customer satisfaction is achieved as CPI fees are manageable and paid with each finance contract payment
- Dealer reinsurance structures allow for loan portfolio risk management and the opportunity to share in underwriting profits
- CPI policies are filed, approved, and compliant with States Department of Insurance. Compliance details are vitally important to protect the finance company and the customers
