About Bennie 719 Expertise I have extensive knowledge in Personal Auto, Homeowners Insurance and Personal Umbrella coverage. Also thoroughly familar with claims handling procedures. Will not be able to quote rates because I took an early retirement. I still maintain a valid California Property/Casualty Agent/Broker license.
Experience Experience in the area: I have been answering questions at allexperts.com since 2002 in the catagory of "Property & Casualty Insurance". Licensed in California since 1961, first in Life/Health for 3 years and as a Property/Casualty Agent/Broker since 1964. Retired at age 58, but still complete my 30 hours of continuing education every two years in order to keep renewing my license.
Question We elected to take "Credit Insurance" when we purchased a new car (05) and we have just found out (6/09) that the loan was "paid out" by the bank in 8/07 . The bank that now has the loan acquired our original loan holder bank in 07 and created a new account # for our loan. So apparently they didn't assume the existing loan, but started a new one. We have been paying the single payment premium through the loan (72month), but we have not had any coverage for the credit insurance since 07. Is this a standard practice for a bank? Shouldn't we be given a refund or credit on our loan if we have not had coverage in 2 years and will not have coverage for the remainder of the loan?
Answer Hi Juli,
I am not familiar with the term "credit insurance".
Do you mean that you do not carry auto insurance and allowed the bank to place a coverage called Vendors Single Interest (VSI) on the car
to protect the banks interest for the balance owed on the car?
VSI protects the bank in case the car is repossessed with damage, if it is stolen and never recovered or in an accident and deemed a total
loss. It protects ONLY the bank for the balanced owed.
There is no protection for you for liability, property damage,
comprehensive or collision and if you total the car the bank gets
paid the balance owed on the loan and you get nothing. As an
example, if the current value of your car is $10,000 and your loan balance is $7,000 and the car should be stolen or totaled in a fault
loss, the bank would be paid the $7,000 that you owe and you would
be paid nothing. If you should have a fault accident that causes
$2,500 damage to your car the VSI would pay nothing toward repairs.
It has become quiet common for banks to be acquired by other banks
in these recent tough economy times. The new owner of your old
bank and the loan will reassign a loan number in conformity with their system.
Whatever type of insurance that was included in your monthly payment
should still be in effect since your payments have remained the same.
I suggest a visit to or telephone call to the new bank to confirm
that fact.
If you learn that you are paying for VSI, you must understand as
I stated above that there is no protection for you. VSI is extremely expensive because it is most commonly purchased by people with
bad driving records who can't afford a full policy. If you and
the other drivers in your household have fair to good driving
records then you should purchase regular insurance so you will be
fully protected. When you do that, you can present proof to the bank and have them stop charging for VSI.
I hope that you find this information to be of help. Your feedback by rating my response will be appreciated.
