What happens if the collateral is damaged and the borrower can’t afford to make repairs? If the collateral is damaged or destroyed, will the borrower soon default on loan payments?
The answer to these concerns is a proactive creditor-placed insurance program: By tracking insurance continuously, more borrowers in the portfolio will stay insured—borrowers will be encouraged to keep their vehicles insured during the full term of the loan. By force-placing insurance on collateral as soon as it becomes uninsured, the lender can avoid the risk of an uncovered loss and large charge-off.
Once you take the plunge into outsourced tracking and creditor-placed insurance with Lee & Mason, you’ll no longer be responsible for any insurance mail. Instead, the tracking facility will handle all insurance mail, matching policies with the loan records and immediately identifying any lapses or cancelations. Once a lapse/cancelation is discovered, notices are sent to the uninsured borrowers, encouraging them to purchase insurance as quickly as possible.
Only after a borrower has failed to promptly act to protect your loan collateral will a creditor-placed insurance policy be put into place. Any damage or loss that occurs to the collateral after the creditor-placed insurance policy becomes effective, will be covered. Therefore the lender won’t be facing a large charge-off. The lender’s profitability is protected against an unexpected charge-off.
Meanwhile, dual interest coverage allows the borrower to avoid repossession by repairing a damaged vehicle and getting it back on the road as quickly as possible. And with automatic coverage of all loan collateral against uninsured physical damage or theft, you’ll enjoy the fullest coverage possible without having to juggle insurance documents and renewal dates yourself.
Creditor-placed insurance offers a number of benefits. A few of these include: