In the United States, many drivers on the road do not have auto insurance. They may come into your dealership or financial lending institution with insurance, but then let it lapse due to difficulties paying or because they never intended to carry insurance on the vehicle in the first place. In the last 5 years auto insurance prices have increased rapidly to a point where drivers with bad credit and one ticket will not be able to afford auto insurance coverage. In five U.S. states, 20% or more of drivers have no insurance; countrywide that rate is even higher.
In addition, some insurance companies have denied valid claims in an attempt to boost their bottom lines. Therefore, insured drivers that leave the dealership with their auto insurance will have a high risk of the insurance company not paying the claim when there is an accident and damage to the lender collateral. Let’s take a look at lender placed insurance, what it is, and why you need it.
What Is Lender Placed Insurance?
Lender placed insurance, also known as forced-placed insurance or collateral protection insurance, is placed on an auto loan by the lienholder. This insurance keeps the vehicle from being uninsured if the customer does not keep up on his or her insurance, or if it lapses or is not enough coverage on the vehicle. However, it doesn’t include the liability insurance that is required in many states. In this case the borrower needs to purchase liability insurance coverage from another insurance company.
Why You Need Lender Placed Insurance
Lender placed insurance will protect your investment in the vehicle you’ve just helped a customer purchase. This insurance will cover the repair costs if the customer is in an accident and the vehicle is not insured, as well as if the vehicle is a total loss.
How Verifacto Can Help with Lender Placed Insurance
Verifacto software can help your dealership or lending institution choose and enforce lender placed insurance on all your vehicles through our state-of-the-art CPI management system and Insurance Tracking platform that also tracks the CPI compliance per state. Verifacto also provides the borrower an insurance marketplace to purchase their liability insurance and save money by comparing prices and getting the best deal. Some of the benefits of using lender placed insurance and Verifacto are:
- Easy to use CPI management system
- Built-in compliance tracking
- Complete auto insurance coverage for all customers prior to driving vehicles
- 24/7 insurance search and selection availability
- Easy-to-use website that integrates with your DMS
- Reliable technical support
- Verifacto’s CIMS™ insurance tracking software
How Verifacto Helps Customers Purchase the Right Vehicle Liability Insurance
When a customer chooses to be placed on CPI for comprehensive and collision coverage, in most states the customer also needs to purchase liability insurance. The customers can purchase the liability insurance they need before they leave the lot or lobby of your business. The VeriSurance Insurance Marketplace kiosk lets them compare quotes from insurance companies and purchase policies on the spot. In addition, the kiosk is free for dealers and customers and specializes in the BHPH nationwide coverage market.
If you want better risk management in your dealership or financial lending institution, try Verifacto. In combination with lender placed insurance, your business will see increased profits and reduced losses using insurance tracking, and the online insurance marketplace for auto dealers and customers who need auto insurance. Help your business perform at its best. Contact us today for a free demo of our software.