CPI Insurance: How Does It Work? What Does It Cover? – ValuePenguin
Collateral Protection Insurance, or CPI, is a type of auto insurance purchased by your lender to protect your vehicle if you don’t have the required amount of insurance coverage. cpi is more expensive than standard car insurance and the policy does not always offer full car insurance coverage.
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Removing collateral protection insurance isn’t difficult: once you have an auto insurance policy that meets the requirements of your contract, send proof of insurance to your lender and they’ll cancel your cpi policy.
Reading: How does cpi insurance work
what is warranty protection insurance?
When you finance or lease a car, your vehicle is used as collateral to secure your loan. Your car acts as a form of protection for your lender: If you default on your payments, your lender can repossess your car and sell it to recoup their losses.
If you were to total your car, your lender might not be able to sell it for enough to cover your loan balance. That’s why your loan agreement requires you to maintain certain car insurance limits. Lenders generally require you to maintain comprehensive and collision insurance. A CPI policy is your lender’s way of meeting your insurance requirement if your insurance policy is cancelled.
cpi is also known as forced auto insurance, lien protection insurance, and auto loan protection insurance.
How does forced car insurance work?
Your lender buys forced auto insurance or warranty protection insurance when your auto insurance policy doesn’t meet the requirements outlined in your contract. cpi provides the insurance you need to honor your agreement and protects your lender by insuring your car against physical damage.
The policy also protects you as a driver. If you were in an accident without proper auto insurance, you could be responsible for paying for vehicle damage.
A CPI auto insurance policy will ensure that you meet the requirements set forth by your lender. many times, the policy will not protect you as a driver. Lenders can purchase CPI policies that provide comprehensive and collision coverage to protect their investment and cover physical damage to the driver’s car. When you buy full coverage auto insurance, you have the option to include medical and liability coverage, which are important to protect you, your passengers, and other parties in an accident.
cpi premiums are added directly to your monthly car payment, so you won’t receive an additional statement in the mail. If you have already been charged for cpi, removing it is a simple process. Once you purchase an auto insurance policy with sufficient coverage, provide proof of insurance to your lender and they will cancel your CPI policy.
Which companies offer warranty protection insurance?
Your lender buys cpi, so you don’t get to choose where it comes from. These are some of the companies that offer warranty protection insurance:
The cpi claims process differs between lenders and insurers. sometimes the borrower can file a claim directly. other times, your lender will take care of the process. Before you are in an accident and need to file an auto insurance claim, we recommend that you contact your lender or CPI insurance company to understand how their claims process works.
is cpi insurance legal?
yes, collateral protection insurance is legal. Your financing or what insurance do you need for a rental car? describes the type and amount of auto insurance coverage you must have.
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If you don’t get an auto insurance policy or let your policy lapse, you’re breaking your contract with your lender. once they find out you don’t have adequate insurance, they will implement a cpi policy to enforce the requirements of the contract.
If you choose not to pay warranty protection insurance premiums, your car may be repossessed.
How much does warranty protection insurance cost?
It can be difficult to determine how much cpi will cost, but it is more expensive than buying your own auto insurance policy.
There are a few ways to calculate the cpi cost:
Regardless of how your premium is calculated, most states impose a maximum cost for collateral protection insurance based on the amount of your loan. Sometimes your lender may not be aware of your lack of auto insurance right away. In that case, you may have to pay your CPI premiums in arrears so you don’t have a gap in coverage.
how can i get rid of cpi car insurance?
Warranty protection insurance is expensive, but removing it isn’t difficult. If you receive a notice from your lender that they are purchasing a CPI policy for you, here are the steps you can take to cancel it:
how can i get a cpi refund?
Occasionally, lenders and insurance companies may make mistakes when verifying your insurance. If your lender purchased a CPI policy while you had the correct amount of coverage and paid the premium, you can request a refund. simply provide them with proof that you were insured for the required period and they will reimburse you for the cpi.
Source: https://amajon.asia
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