Collateral Protection Insurance
What is collateral protection insurance?
Collateral protection insurance is also sometimes referred to as “lender placed” because a lender buys it, but you pay for it. This type of insurance only comes into play when a person has a loan on a vehicle and either cancels or lapses the insurance coverage on that vehicle. Because lenders want to protect their interest in the asset, the law allows them to buy this insurance on your behalf. The policy covers the vehicle up to the amount of the loan and legally forces you to pay for it. Collateral protection terms and conditions are usually found in all auto loans.