Information on Collateral Protection or Force-Placed Comprehensive and Collision Insurance

If you finance the purchase of your automobile, your lender may require you to carry comprehensive and collision coverage. If you do not already have this coverage, the lender may "force place" coverage for you, and you will have to reimburse the lender for the premiums paid. This is called collateral protection or force-placed insurance. In most cases, this coverage only protects the lender and does not protect you for your interest in the vehicle. In addition, it does not protect you against liability for damage or injury you cause to another person or automobile. If you do not want your lender to "force place" your comprehensive and collision coverage, you may add this coverage to your existing policy, or if you do not have an existing policy, you may wish to contact several agents or insurance companies to shop for the best price and coverage available. Remember that if you allow the lender to "force place" comprehensive and collision coverage for you, the force-placed policy will not satisfy the financial responsibility requirements of the Department of Motor Vehicles to carry minimum limits of liability insurance.