Full Coverage Versus Acceptable Insurance
Updated: May 27, 2022
WHAT IS THE DIFFERENCE BETWEEN YOUR BORROWER HAVING FULL COVERAGE INSURANCE VERSUS ACCEPTABLE PROOF OF INSURANCE?
WE ARE FREQUENTLY TOLD THAT THE BORROWER HAS FULL COVERAGE INSURANCE. however, DOES FULL COVERAGE INSURANCE REALLY PROTECT YOUR FINANCIAL INSTITUTION? THE SHORT ANSWER...NO!
FULL COVERAGE INSURANCE IS A COMBINATION OF LIABILITY INSURANCE, COMPREHENSIVE INSURANCE AND COLLISION INSURANCE. FULL COVERAGE INSURANCE ADEQUATELY COVERS YOUR BORROWER, BUT IT DOES NOT PROPERLY COVER YOUR FINANCIAL INSTITUTION.
YOUR FINANCIAL INSTITUTION NEEDS TO REQUIRE YOUR BORROWER TO HAVE ACCEPTABLE PROOF OF INSURANCE. ACCEPTABLE PROOF OF INSURANCE REQUIRES YOUR BORROWER TO HAVE COMPREHENSIVE COVERAGE AND COLLISION INSURANCE. IT ALSO REQUIRES YOUR BORROWER TO HAVE THE LOSS PAYEE LISTED ON THE POLICY, THE REQUIRED DEDUCTIBLES, NAMED INSURED, AND, MATCHING COLLATERAL WITH THE LOAN DESCRIPTION. ACCEPTABLE INSURANCE DOES NOT INCLUDE LIABILITY INSURANCE.
MAKE SURE YOU KNOW YOUR COVERAGE TO KEEP YOUR BORROWER AND FINANCIAL INSTITUTION PROPERLY INSURED.