Monthly vs. Traditional CPI


1	CPI Type:	Monthly Payment	Traditional

2	Is insurance tracked?	Yes.	Yes.
3	How is premium charged?	Only exposed borrowers pay.	Only exposed borrowers pay.
4	How is premium rate determined?	Flat monthly rate determined through underwriting.	The premium is CFPB compliant & based upon outstanding loan balance.
5	Who can file a claim?	May be single or dual-interest. If dual-interest, both parties may file a claim.	Typically dual-interest. Both parties may file.
6	What is the liability limit?	$50,000.00	$75-100,000. Lesser of loan balance, ACV, contract balance, or limit of liability.
7	What is coverage term?	Continuous until canceled. Individual certificates must be renewed at each term expiration.	Continuous until canceled. Individual certificates are effective for 12 months.
8	Are there refunds?	Yes. Monthly pro-rata.	Yes. Daily pro-rata.
9	Is there premium deficiency coverage?	No. If premium is added at the end of the loan, and institution is unable to collect premium, this will result in a charge-off.	Optional lender coverage.
10	Is there Instrument Non-filing coverage?	No.	Optional lender coverage.
11	Is there conversion and confiscation coverage? AKA, “Skip” coverage?	No.	Optional lender coverage.
12	Is there repossessed collateral coverage?	No.	Optional lender coverage.
13	Is there mechanics lien coverage?	Optional lender coverage.	Optional lender coverage.
14	Is there repossession expense & storage coverage?	Optional lender coverage.	Optional lender coverage.
15	What is the notification process to the borrower?	Series of monthly letters at the renewal of the monthly policy.	Same, plus a series of compliance letters which run from 56-77 days.
16	What is the grace period?	30 days. (New loans)	30 days. (All exposures)
17	What is the standard borrower deductible?	$500.00	$500.00
18	What is the standard lender deductible?	$500.00	$500.00
19	Which program is less costly to the borrower?	Flat rates, no integrated lender commission, borrower perception, and other economies, generally make monthly less costly. In truth, costs are dependent upon the actual portfolio and borrower behavior.	Full annual premium is added, giving a perception that it’s more expensive.
20	How long is the average in-force term?	The smaller monthly premiums may not create as much urgency to secure coverage. According to one provider, borrowers keep Monthly CPI in force an average of 8 months.	Traditional CPI stays in force on average only 4 months.