Protect Your Financial Interest with Force-Placed Insurance

By Desiree Bradsher - March 24, 2023

Car insurance is part of life. We are all required to carry insurance on our vehicles, but that doesn’t stop some individuals from dropping their insurance, allowing it to lapse, or giving false insurance policy details to begin with. Uninsured motorist percentages continue to rise, with states such as Mississippi and Michigan’s uninsured percentage sitting at nearly 30%.

While not having active insurance on the vehicle will remove coverage for the customer (such as bodily injury or rental car coverage), it also removes any coverage for damages to the vehicle itself. The vehicle that, while being financed or leased, is still property of the dealership or finance company. So how do these companies protect their financial interest?

Many are turning to adding force-placed insurance.

Force-placed insurance is there to protect the company’s financial interest of the property, not the customer. If there are expensive damages or a total loss of the vehicle, the insurance premiums will be paid out to the dealer or financial institution that took out the policy. This is referred to as “force-placed” because the cost of the coverage is passed to the customer who has failed to get their own insurance.

This coverage, which again offers no benefits to the customer themselves, is significantly more expensive in most cases than if customers were to carry their own insurance policy on the vehicle. This is usually the motivation customers need to then start their own insurance on the vehicle again.

Deal Pack makes adding force-placed insurance premiums to customer’s existing installment plans simple, allowing it to be collected right along with customer’s scheduled payments. A lot of time, energy, and manpower can go into keeping tabs on insurance policies for all loans and leases.

Thankfully there are companies such as Berkshire Risk, Kistler, and Verifacto that can lend a hand in making this process much simpler and leaving less room for error. Deal Pack offers an additional integration with insurance verification companies. This feature assists with verifying insurance information provided and can also assign force-placed insurance when it is determined there is no active insurance policy on the vehicle.

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