Collateral Protection Insurance (CPI) is a fundamental part of a comprehensive risk management strategy to protect a lender’s auto loan business. In today’s auto lending climate of more and more non-prime loans, it has never been more critical to put this strategy in place.
However, it’s equally important to put the right CPI program in place. Our CPI program for an auto portfolio is an established product with a proven track record of success in protecting lenders. Our program is also fair to borrowers: only those who use it pay for it, and only for the periods where there is a lapse in coverage.
Although CPI is designed to protect the interest of the lender, many are unaware that it commonly provides benefits to borrowers as well. When repairs are made on damaged vehicles that are not repossessed, borrowers keep their vehicles and remain motivated to make loan payments, which reduces delinquencies, repossessions, and charge-offs. If collateral is damaged and repossessed, CPI will reduce the deficiency balance, thereby lessening the ultimate liability for the borrower. Additionally, CPI premiums motivate borrowers to obtain their own vehicle insurance as required by their loan contract - the prime objective for a program in the first place!