Collateral-Placed Insurance (CPI), also known as Collateral Protection Insurance or Force-Placed Insurance, is a form of insurance coverage used by lenders as a last resort to protect collateral purchased with a loan. CPI is not full insurance coverage, because it only protects what you purchased. It does not provide liability coverage, nor does it protect you or others in the case of injury.
CPI is also much more expensive than typical insurance. This is because it covers the entire amount left on the loan, whereas normal insurance covers the actual cash value of the collateral, which means you’re covering the true value of your collateral.
There are a handful of reasons you would end up paying for CPI coverage. Let’s cover the reasons someone would have CPI, what it means if you do, and how you can get rid of it.
CPI is applied to someone’s loan when they don’t have the required insurance coverage for their loan, and they haven’t corrected the discrepancy. MyInsuranceInfo partners with your financial institution to be sure you’re sufficiently covered. Your financial institution sends multiple notices, either in the mail or via email, to correct any problems with insurance coverage. However, if you fail to verify your insurance coverage, CPI is applied to make sure the loan is covered in case of an accident.
You will know you have CPI if you see a sudden increase in your monthly loan payments. If you have noticed this sudden increase, you should complete the easy verification process through the MyInsuranceInfo portal to update your insurance coverage information.
On top of the cost increase associated with CPI, there are other risks involved in having this coverage. CPI is not full insurance coverage, which means that if an accident resulting in damage or injury happens, you could still be personally accountable for paying the cost of the damage or any medical expenses associated with the accident. CPI leaves you at a greater risk because it insures your collateral, but not you. For these reasons, it is best to get rid of CPI as quickly as possible.
Luckily, getting rid of CPI is a simple process. To remove CPI, you simply need to make sure you have sufficient coverage as outlined in your loan agreement. Once you’re sure you are sufficiently covered, submit that insurance information through MyInsuranceInfo’s secure portal. We will need proof of insurance and your financial institution listed as the lienholder on your policy, and then your job is done.
Once you submit your insurance information, we will verify that the coverage meets your loan requirement. If anything else is needed from you, we’ll alert you via the email address you provide during the verification process or send you another letter. Otherwise, everything can be handled on our end. Once CPI is removed from your account, you will receive a notice in the mail confirming the cancellation, and you will be all set.
In most cases, when people get a notice asking them to verify their insurance coverage, it gets resolved without CPI ever being necessary. If you do end up being charged for CPI, you’ll want to get it resolved quickly. By completing MyInsuranceInfo’s secure insurance verification process, you can avoid paying for CPI and make sure everyone involved is informed about your insurance coverage.
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