COLLATERAL PROTECTION INSURANCE (CPI)
As a Buy Here Pay Here (BHPH) dealer, you're well aware of the challenges in keeping your customers' vehicles insured. It often involves expensive premium quotes and high down payment requirements, along with the recurring issue of dropped insurance and the subsequent pursuit of customers to reinstate coverage, only for the cycle to repeat.
Fortunately, Collateral Protection Insurance (CPI) can address these challenges while increasing your profitability. CPI is a commercial insurance product that establishes an agreement between a lender and a collateral protection insurance company. Lenders opt for CPI to safeguard their assets in the event of physical damage to a vehicle that would otherwise be uninsured. When a customer fails to maintain adequate insurance, the lender has the right to place the asset on CPI, with the cost of the coverage passed on to and collected from the customer.
The advantages of CPI include:
No upfront costs: You don't have to bear any initial expenses when implementing CPI.
Underwriting profit: As a lender, you can earn the underwriting profit through reinsurance, boosting your profitability.
Quick and streamlined claims process: CPI ensures a swift and straightforward claims process, minimizing hassle and saving time.
Convenient premium collection: The CPI premium can be collected at the same frequency as the auto loan payment, simplifying the process for both you and your customers.
By leveraging CPI, you can overcome the challenges associated with insuring customer vehicles, ensuring reliable coverage while maximizing your profitability.