by xfi_servicing » Fri May 08, 2009 05:35 pm
Our customers insurance policy canceled one day before they were involved in a minor fender-bender. Our customers insurance company states policy canceled, no coverage. I disagree. The loss payee endorsement should protect us the lienholder for 10days...Am i wrong.. we are in FLORIDA!
Posted: Fri May 08, 2009 08:15 pm Post Subject:
I _think_ you are wrong. From what I remember... a long time ago... there is some type of grace period of 10 days. But this would be _prior_ the the time when the policy can be cancelled. That is, notification needs to go out giving 10 days and then the policy is cancelled. So once it's cancelled, there is no coverage. Also, the cancellation date is back dated at that point.
Posted: Sat May 09, 2009 02:27 am Post Subject:
The only sure-fire way of determining coverage for the lienholder is to look at the contract. There are definitely some policies that will extend coverage to a lienholder or mortgagee for a period of time after cancellation. This is normally allowed in order for the creditor to have a bit of time to contact their insured to resolve the issue and to possible place VSI (Vendor's Single Interest) coverage on the borrower. Keep in mind that not all contracts contain this language, but it's typically there.
Check the policy- it will have language that will clarify your question, and keep us in touch!
InsTeacher 8)
Posted: Sat May 09, 2009 05:41 am Post Subject:
There are definitely some policies that will extend coverage to a lienholder or mortgagee for a period of time after cancellation.
Why would they do so? I think the policy was cancelled for non-payment, then why the insurance company would cover the losses when they were not even paid. Won't they try to recover from the insured the loss that they have experienced on his behalf?
Posted: Sat May 09, 2009 11:33 am Post Subject:
Our customers insurance company states policy canceled, no coverage. I disagree. The loss payee endorsement should protect us the lienholder for 10days...Am i wrong.. we are in FLORIDA!
It depends...what does the loss payee endorsement say EXACTLY?The one I'm looking at, (different state)...doesn't provide additional time, only addresses that Loss payee is protected in event of a claim (basically)
Posted: Sun May 10, 2009 05:46 pm Post Subject:
Did you (lienholder) receive notification of cancellation? I thought the lienholder had to receive a notice of cancellation as well as the policyholder. The lienholder can then force their own collateral coverage for their insurable interest.
Lori....any thoughts on this?? I am not sure...
Posted: Mon May 11, 2009 04:26 am Post Subject:
Hi Daystar, nice that you have joined us back :)
I thought the lienholder had to receive a notice of cancellation as well as the policyholder.
Can you throw some more light on this issue? I think the insurer might chose to inform the policy holder before cancelling the plan but they definitely aren't liable to do so. Its the responsibility of the policy holder to stay update. Does thing work differently when lienholder is involved?
Posted: Mon May 11, 2009 12:31 pm Post Subject:
Daystar says:
I thought the lienholder had to receive a notice of cancellation as well as the policyholder.
Did you come across any instances wherein it happened like that? Please share it with us in case you have seen a notice of cancellation being served to both of them.
The lienholder can then force their own collateral coverage for their insurable interest.
Does it usually happen that way? Or is their any alternative way of going about it?
Steven
Posted: Mon May 11, 2009 03:34 pm Post Subject:
Yup, I think in most cases the carrier needs to send a written notification to the lien holder (provided the carrier knows about them). As daystar mentions, this allows the LH to obtain their own policy on the vehicle to protect their interest.
Posted: Mon May 11, 2009 08:24 pm Post Subject:
Hey Kelvin,
It is nice to be back. :)
As Tcope also stated, in most cases the LH has to be notified. I have run across several occurrences such as this one and there is always a lot of question as to why the LH was not notified of the cancellation. I know for sure that if my auto coverage was cancelled GM would immediately force coverage until I could get a replacement policy. Same thing with homeowners. Were you listed as the lienholder when the policy was written?
Posted: Tue May 12, 2009 03:29 am Post Subject:
Hey Daystar, thanks for responding to my queries buddy :)
The lienholder can then force their own collateral coverage for their insurable interest.
Is it same as the collateral protection insurance?
As Tcope also stated, in most cases the LH has to be notified.
Since the LH wasn’t informed in this particular case, do they have any recourse against the insurer now? Can the lienholder hold the insurer for negligence and demand compensation on the damaged collateral?
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