CPI – Collateral Protection Insurance, insures property held as collateral for loans made by lenders. CPI, also known as FPI, VSI or force-placed insurance and lender placed insurance, may be classified as single-interest insurance when it protects only the interest of the lender, a single party, or as dual-interest insurance coverage when it protects the interest of both the lender aas well as the borrower.
On contract execution borrowers typically agree to purchase and maintain their own insurance, including comprehensive and collision coverage for automobiles and list the lender as the lienholder. When the borrower fails to purchase such coverage, the lender is left vulnerable to loss and the lender the turns to a CPI provider to protect its interests against loss by the placement of a CPI policy.
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