Verifacto’s CPI Solution
Lenders are experiencing an increase in insurance policy cancellations due to rising auto insurance costs, which exposes them to uninsured losses. Collateral Protection Insurance is the most effective way to protect an auto loan portfolio. Verifacto offers technology that helps BHPH dealers and auto finance companies manage a CPI program with minimal overhead and increased compliance, making it the most profitable and efficient program in the market.
What is CPI?
Collateral Protection Insurance, or CPI, also known as force-placed insurance, is an insurance policy that protects auto lenders from financial losses resulting from having to pay claims when someone does not have auto insurance. Upon signing a loan agreement, the borrower typically agrees to purchase and maintain insurance. This includes comprehensive and collision coverage and list the lending institution as the lienholder. If the borrower fails to purchase such coverage, the lender is left vulnerable to losses, and the lender turns to a CPI provider to protect its interests against loss.
Increase PROFIT & Reduce LOSSES
Everyone who buys a car must sign a POS Letter. The documents states that the borrower must have physical damage insurance with a maximum deductible of $500.00 and name the lender as loss payee. If the borrower does not provide evidence of required insurance, the lender may insure his interest in the financed auto under his Creditor Placed Insurance (CPI). Even if the borrower does have insurance when they purchase the vehicle, they might lose it in the future. If the borrower loses their insurance, they will be placed on CPI. At any time, the borrower can purchase regular insurance, and the lender is obligated to remove the CPI from the time that the borrower showed a new proof of insurance.
IMPORTANT: CPI only provides Collision and Comprehension coverage. Liability must be bought from a 3rd party insurance company.
CPI Compliance
The CPI enrolment and management processes are very complex due to the compliance requirements of each state. The lender has very limited visibility and awareness of the insurance statue of the borrower, which increases the possibility of a compliance breach. The lender has the difficult task of controlling and managing the compliance risks and avoiding any compliance mistakes. Unfortunately, most CPI insurance companies don’t have the capability to leverage next generation software to manage and control the CPI process. This creates risk for compliance mistakes on their end. The lender is responsible for any compliance issue related to their CPI program.
“Verifacto’ s software helped us manage our Insurance risk with minimum overhead. The integration of insurance tracking helps us to be effective and more compliant.”
Lisa GougeInsurance/Bankruptcy Manager
Independent Dealers Advantage, LLC
Verifacto CPI software
Verifacto’s CPI software monitors, controls, and automates the entire CPI process. The CPI software is integrated with Insurance tracking, which enables CPI automation and increases compliance enforcement with minimal effort. The software also monitors the CPI insurance company process and compliance. Thus, providing full visibility to the lender on every task that was performed by the CPI insurance company.
Verifacto CPI Management Services
- Dedicated CPI support person that is available via email or phone for any support questions related to CPI
- Answer calls from customers related to CPI questions
- Placement of CPI for accounts without insurance or with insurance deficiency and print and mail out the first letter.
- Before placement, Verifacto’s team will communicate with the insurance agency via phone/portal to monitor and verify borrower insurance
- Monitor and update any borrower’s insurance. Verify borrower’s insurance and remove CPI. Verifacto’s team will communicate with the insurance agency via phone/portal to monitor and verify borrower insurance
- After post grace period, finalize the CPI placement and mail out the CPI Placement Letter with CPI certificate.
- Compliance check on all CPI accounts.
- Send everyday Email reports of placements and removal to the lender.
- Maintaining all CPI documents (letters) for all CPI accounts.
