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Collateral Protection Insurance (CPI)

Collateral Protection Insurance (CPI)

Collateral Protection Insurance (CPI) protects automotive finance companies in the instance that the collateral protecting their interest in the loan becomes uninsured. Designed to help financial institutions to manage their risk, to keep their customers on the road, and to provide an alternative income source, ARS’ currently insures hundreds of finance companies and ten of thousands of vehicles on the road. With a focus on maximizing efficiency and effectiveness, emphasizing the use of technology in the enrollment and claims processes, ensuring compliance through in-person training and routine follow-ups, robust management reporting and deep relationship building, ARS’ is clearly the preferred provider in the CPI space.

The Need:

American Risk Services' CPI Program addresses the fact that up to 75% of non-prime auto customers do not have insurance coverage upon entering a dealership. Because the Lender requires customers to provide insurance that protects their interest in the financed vehicle, customers will often purchase a binder (short-term coverage) in order to close the loan. However, in these cases, coverage will almost always cancel a short time after purchase due to non-payment. Thus, the lender is left with uninsured loans with the potential for physical damage losses and resulting charge-offs.

The Solution – CPI:

ARS' convenient CPI Program provides the finance company protection against physical damage or theft of the collateral, dramatically reducing these damage-related losses and charge-offs, as well as repossessions (as vehicle repair is covered, allowing customers to continue making their loan payments as opposed to the alternative, in which these customers become overwhelmed by bills for such damages that ultimately result in repossessions).

Through integration with the finance company’s lender management system or through ARS’ intuitive web-based system known as ARS Insure, the loan customer can be enrolled into the CPI program in-person at the dealership at loan origination, eliminating insurance verification delays that would otherwise be present. Protection of collateral is immediate upon enrollment and insurance fees are collected on the same schedule as the loan contract payments are made.

The Benefits:

  • Systematic and simple approach to assuring loan collateral is insured
  • Fast claims service for enrolled collateral that suffer damage or are stolen
  • Increased lending margins through lower collateral losses and decreased charge-offs
  • High borrower satisfaction as insurance fees are manageable and paid with each contract payment
  • Dealer reinsurance structures allow for loan portfolio risk management and the opportunity to enjoy underwriting profits
  • Fully compliant with state insurance regulations
  • ARS exceeds the highest industry standards of security and compliance through SSAE-16 Certification (formerly SAS-70 II)
  • Coverage provided by insurance companies rated ‘A’ (Excellent) or better by the A.M. Best Company




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