Auto Dealer Covering Comp/Collision

ntbktrader

Expert
88
Been in insurance for a while and this is the first time I've come across this. Lady calls me and tells me she wants liability only, I ask the vehicle info and ask if it has a loan on it, it does have a loan so I explain that the loan company will require comp/collision coverage. She tells me the auto dealer gave her comp/collision coverage and told her she just needs the liability portion. I call the dealer and they say that is correct, she has CPI (forced placed credit protection insurance) she just needs the liability. I've seen forced place insurance after they don't pay their insurance bill but not when they first purchase the vehicle? Anyhow, that's new to me and I don't really want to write liab only on a vehicle I know has a loan on it...

Any thoughts/advice?
 
Yes, this is a thing, and it is legit. The dealer/lienholder (usually one and the same in these cases) acquires coverage for their interest in the vehicle, and charges the borrower the premium, who normally gladly pays as it's a fraction of the costs of buying their own comp/collision. In the event property damage occurs and there is no liable party, or the borrower is liable...the payout is no more than the current amount of the lien.
You can attempt to explain to your insured that this means their interest in the vehicle is not protected, and all the money they invested is gone...every once in a while you will convince them, but typically it's the only way they can afford to insure the car...
 
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