CPI Insurance | Collateral Protection Insurance for Auto Lenders

As a global provider, HUB Financial Services offers Collateral Protection Insurance (CPI) for Auto Lenders. Our CPI solutions are specially tailored to meet the unique needs of auto lenders around the world. In an ever-changing economic climate, CPI can help to make the difference in your organization’s bottom line.

What is Collateral Protection Insurance?

Collateral Protection Insurance (CPI) protects auto lenders’ interests in vehicle loan collateral. In the event that a borrower fails to maintain auto insurance on their vehicle that has been purchased with a loan, CPI is the safety net for the auto lender. CPI provides insurance coverage that ensures that the auto lenders’ interests are protected.

How Does CPI Protect Auto Lenders?

When a borrower makes a vehicle purchase with the assistance of an auto loan, the lender typically requires that the vehicle has adequate insurance coverage for the life of the loan. In case of accident or damage of any kind, the asset, owned by the auto lender until the loan is repaid, remains an asset and not a liability. CPI is insurance coverage for underinsured and uninsured vehicles, and protects the auto lenders from loss.

Specifically, CPI with HUB Financial Services protects auto lenders in the following ways:

Coverage For Uninsured Collateral

The main function of CPI is to provide coverage for uninsured or underinsured vehicles. CPI kicks in automatically if a borrower’s vehicle insurance coverage lapses for any reason. This insurance for auto lenders specifically protects the lenders’ financial interests.

Risk Management and Compliance

CPI supports auto lenders’ risk management and compliance needs. At HUB Financial Services, we offer Collateral Protection Insurance, which also works to monitor the insurance coverage of borrowers, in turn enforcing compliance with the lenders’ insurance requirements. It can be thought of as proactive risk management, which is why most auto lenders choose CPI as part of their portfolio of insurance coverage.

Benefits of CPI for Both Lenders and Borrowers

CPI is a vital safeguard for both lenders and borrowers, offering peace of mind and financial security in uncertain times. At HUB Financial Services, we understand the paramount importance of CPI in ensuring stability and protection for all parties involved in lending transactions. 

For lenders, CPI offers a multifaceted array of advantages. Firstly, it serves as a risk mitigation tool, shielding against potential loan defaults stemming from unforeseen circumstances such as job loss, disability, or borrower mortality. Moreover, by ensuring compliance with regulatory standards, CPI helps lenders uphold responsible lending practices while fostering customer trust and loyalty. Offering CPI can also add a competitive edge, by adding value to loan offerings and attracting borrowers seeking comprehensive financial protection. Another benefit of CPI for lenders is that the cost can easily be passed on to the borrower, as a requisite of the loan terms.

Borrowers get peace of mind knowing that they are in compliance with their lenders’ requirements, even if their own auto insurance lapses for any reason. This assurance not only alleviates concerns but also preserves borrowers’ credit ratings by ensuring timely loan payments during challenging times. Auto lenders also have the right to initiate creditor-placed insurance if a borrower’s vehicle insurance lapses. With CPI, borrowers get the benefit of enhanced customer service, with the assurance that the lender is protecting the borrowers’ interests, rather than having force-placed insurance–also known as lender-placed insurance–where the borrower has no choice in the matter.

HUB Financial Services offers a centralized solution for protection insurance for auto lenders. CPI insurance coverage is just a part of the many services we provide. Most auto lenders also appreciate the added coverage possible with Vendor Single Interest Insurance, or VSI. VSI offers its own set of benefits that auto lenders can rely on when borrower insurance coverage seizes. For more information on the whole suite of services that HUB Financial Services offers, please contact us today.