There are several reasons that will cause a letter to be sent:
If your letter states your insurance has expired, we have not received a copy of the renewal coverage. If your letter states your insurance has been canceled, we have not received a copy of the reinstatement or evidence of other current coverage.
"Loss payee" is used on your insurance policy to refer to the financial institution that you financed the purchase of your vehicle through. The lender is also known as the "Lien Holder" on the title of your vehicle in the event that you had the vehicle financed.
If you do not buy your own insurance, your lender may buy insurance to protect their interest in your collateral. The insurance your lender buys will generally be much more expensive than what you can buy yourself. The loan agreement that you signed allows your lender to add the premium for this insurance to your loan and may also cause your payments to increase to cover the cost. The insurance your lender purchases will primarily cover their interest in your vehicle. It does provide you with basic collision and comprehensive coverage, however may not offer you the protection you can get when you buy your own insurance. It will not provide liability coverage which many states require you to maintain. You are strongly urged to purchase your own insurance.
Maintaining insurance coverage on your vehicle is a condition of your loan with us, so you should contact the insurance agency or company of your choice and purchase Comprehensive and Collision coverage naming us as the Loss Payee. You will find our name and address on the letter that we sent to you. There are many insurance agents and companies posted on the Internet or in your local yellow pages who can provide the coverage that we require, in addition to state mandated liability insurance.
You are required to maintain Comprehensive and Collision coverage protecting our interest in your collateral as one of the conditions of granting your loan until your loan is paid in full. You will find this requirement in your Loan Agreement. By giving your insurance agent our name and address as Loss Payee, we will generally receive a copy of any change to your coverage. A letter was sent to you because we did not receive a copy of your policy/renewal/reinstatement from your insurance agent or company. We are asking for your help to show us that you have met requirement.
It's possible that your proof of coverage was misdirected due to an incorrect address. Please contact your insurance agent and ask them to send a copy of your policy to the address shown on the letter. Request that your loan number and the correct loss payable clause be included as cited on the letter. You can also send your proof of insurance to us at the address shown on the letter. Please be sure to include your lender name and loan number.
There are a number of reasons why the proof of insurance you provided may be inadequate to meet your lender's requirements such as:
Standard policies are underwritten based on multiple "risk factors" known to the insurer. The insurer has had the opportunity to underwrite your collateral including risk factors such as condition, experience, age, driving record, prior claims, etc. These and other factors define the risk exposure to your carrier. Force placed (creditor placed) insurance is non-underwritten and provided by the carrier on collateral in their portfolio when it becomes uninsured. Since the exposure to the carrier is unknown, the premiums are often higher for this type of insurance.