What Is Collateral Protection Insurance (C.P.I.)?

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What is Collateral Protection Insurance (CPI)?

All car owners are required to maintain, at a minimum, basic auto liability insurance. Cars with outstanding loan balances also should be protected by comprehensive and collision coverage. Keep reading to learn more about each type of insurance and how you could save money on insurance premiums when you buy a quality pre-owned vehicle from AutoMax.


Auto Insurance in North Carolina

The State of North Carolina requires you to have basic auto liability insurance, sometimes called 30/60/25 coverage. Generally speaking, liability insurance is the least expensive coverage you can purchase from a private insurer.

North Carolina law requires a minimum coverage of:

  • $30,000 per injured person
  • Up to a total of $60,000 for everyone hurt in an accident
  • $25,000 for property damage

Basic coverage might not be enough if you are liable for an accident. Consider buying more than the basic coverage to protect yourself from paying out of pocket or facing costly lawsuits if you caused an accident that injured people or damaged property.

When you purchase an auto insurance policy, your insurance company will send you a proof-of-insurance card. You will have to show proof of insurance any time a law enforcement officer asks for it, and when you have a car accident, register your car, renew your registration, obtain or renew your driver’s license, or get your car inspected.

However, if you owe money on your car loan, you will be required to have an additional insurance policy insuring your vehicle, aside from basic liability.

Collateral Protection Insurance

In accordance with the Motor Vehicle Retail Installment Sales Contract used by AutoMax and almost every other lien holder in the state of North Carolina, you, the Borrower, agree to keep the collateral (your vehicle) insured against damage or loss, until the balance you owe under this contract is paid in full.

The contract you signed when you purchased your vehicle from AutoMax refers to this coverage as “Property Insurance.” You are also required to list AutoMax as the lienholder on your insurance policy. 


There are two types of coverage your lien holder will accept that meet the “Property Insurance” requirements. You only need to purchase one of these. They are:


  • Collision and Comprehensive Coverage. Collision coverage pays the cost of repairing or replacing your car after an accident. The payment amount is often limited to your car’s cash value, as determined by the insurance company, minus your deductible. Comprehensive pays the cost of repairing or replacing your car if it is stolen, damaged in a fire or in hail, vandalized, or another covered cause other than collision (a car wreck).
  • CPI, or Collateral Protection Insurance. CPI is accepted by some lenders, including by AutoMax, instead of Collision and Comprehensive Coverage. CPI is often less expensive than traditional insurance, although some lenders charge as much as $250 per month for CPI. However, AutoMax charges less than half of that! Is CPI right for you? Keep reading to find out!


Collateral Protection Insurance (CPI) from AutoMax
AutoMax understands that auto insurance is expensive and can put strain on already tight monthly budgets. Our Collateral Protection Insurance helps you save money on a policy, while protecting your investment. (Note that CPI does not include liability coverage as required by the State of North Carolina. Liability coverage pays for damage and injuries you cause if you are responsible for a car accident.)

For a flat rate of just $89 per month, you can purchase CPI. This price is the same for all of our customers, regardless of your driving record, age, and credit score. You are never penalized for past traffic tickets or accidents, including DWIs, being an inexperienced driver, or your financial history. 


When you purchase CPI, AutoMax makes it simple for you. You can pay your insurance premium when your car payment is due, and the $89 payment is divided among your weekly or bi-weekly payments. For example, if you pay weekly car payments, your CPI will cost you just $20.53 each payment. If you make bi-weekly car payments, your CPI will cost you just $41.07 each payment. We’ll never tack on agency, payment, or policy fees!

CPI covers the buyer, co-buyer, and all in-home drivers for one price, but does not include the basic liability insurance that the State of North Carolina requires. CPI from AutoMax is only available to current AutoMax customers and only on cars financed at AutoMax. This coverage comes with a $500 deductible, which means any time you file a claim on this insurance, you may need to pay $500 toward repairs as a result of the claim. Deductibles are standard on all auto insurance policies.


When AutoMax Force-Places CPI On Your Account
If we force-placed Collateral Protection Insurance on your account, it is because you failed to meet the property insurance requirement as outlined in the standard Motor Vehicle Retail Installment Sales Contract, which states you, the Borrower, must agree to insure your vehicle against damage or loss until your loan balance is paid in full.

We force-place insurance for your protection! Having this policy on your vehicle protects you in the event the vehicle you purchased from AutoMax is damaged in a car accident, particularly in the event your vehicle is totaled. You could be required to pay back your auto loan in full, even if your car became an undriveable total loss after an accident!

If your property insurance cancels for whatever reason, they will notify AutoMax. An AutoMax representative will call you or send you a letter first to make sure you do not have coverage elsewhere. Should we find you do not have coverage in place, we will add CPI to your account with us. We never use a third-party vendor for this process. An AutoMax team member will contact you directly.

We understand that sometimes our customers switch insurance companies and forget to tell us. That’s why we always try several times to contact you before we force-place an insurance policy. But don’t worry! If we added CPI to your account, but you can provide proof that there was never a lapse in insurance coverage, AutoMax will refund you up to four months of CPI premiums and remove CPI when you prove you have the required property insurance policy.

Still have questions? Call us…

We are here to help. Our team members in the insurance department have years of experience dealing with complicated issues. We can help you navigate any complicated insurance issues.

If you are a Youngsville customer, please call Heather at (919) 570-1107.

If you are a Henderson customer, please call Matt at (252) 430-1006.