Collateral Protection Insurance
Finance companies involved in credit transactions face the threat of heavy losses from uninsured

collateral. The cost of enforcing insurance provisions and the number of repossessions caused by the

uninsured collateral has prompted the need for collateral protection. The lenderís collateral protection

provides the lender with coverage for physical damage on collateral held by the lender. If the auto,

truck, or camper is not insured by the borrower, the lenderís interest is protected. In addition, the

policy provides reimbursement coverage for both mechanics lien and repossession expense of an

insurable loss is suffered at the time of repossession. Characteristics of the risks to consider include

the number of collateralized loans made each month, and whether insurance is required in

the loan contract.
The range of collateral covered can include auto, trucks, van, campers, motor homes, boats, etc. The

coverage is written on a report policy with limits up to a maximum of $50,000 per loan with deductible.

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