What Does CPI Insurance Cover and How It Works

CPI insurance is designed to provide financial protection in the event of a total disability or death. This type of insurance typically covers a portion of your income, ensuring that your loved ones can maintain their standard of living.

The coverage amount is usually a percentage of your income, which can range from 50% to 100%. For example, if you're earning $100,000 per year and have a 75% coverage, you'll receive $75,000 in the event of a total disability or death.

CPI insurance policies often have a waiting period, during which time you'll receive a reduced benefit or no benefit at all. This waiting period can range from 30 to 90 days.

CPI, or Collateral Protection Insurance, is a type of insurance that protects lenders in case a borrower damages their vehicle and doesn't have adequate insurance coverage.

Here's how it works: the policyholder pays for CPI as part of their monthly auto loan cost. The terms and conditions of CPI vary by policy and lender, so it's essential to carefully review the details of the policy before agreeing to it.

If a borrower defaults or damages their car, the CPI policy will pay the lender an amount equal to the outstanding balance on the loan, up to the policy limits. This amount is typically used by the lender to pay off the outstanding balance on the loan.

CPI insurance is a specialized policy that lenders can add to loans when borrowers fail to adequately insure their financed assets.

Lenders most commonly add CPI to auto loans if you can’t provide proof of car insurance within a reasonable timeframe, if you purchase inadequate coverage, or if you allow your coverage to lapse.

CPI is also known as lender-placed, force-placed, lien protection, or loan protection insurance.

Lienholders require CPI when a person who has financed or leased their vehicle hasn't insured it properly.

If you've financed your car, your lienholder will mandate you to buy an auto insurance policy with adequate coverage limits.

A CPI policy is designed to protect your financing company's interests, not drivers.

CPI covers the outstanding loan balance in the event of damage or loss to the asset, protecting the lender from financial loss.

Some CPI policies also include liability coverage that pays for another driver's damages in an accident you caused.

Others provide medical expenses, depending on the CPI provider, but this is rare.

CPI has the following options.