Gap Protection
Guaranteed Asset Protection (GAP) protects you against financial loss in the event your vehicle is damaged beyond repair (totaled) or stolen and never recovered. Since a vehicle’s value declines as a result of depreciation, the loan balance can be higher than its Actual Cash Value (ACV). Without GAP, you would be responsible for paying the difference between the insurance settlement and the outstanding loan balance. Due to deductibles and the ACV, most cases you are left with a balance that is required to be paid off immediately in order for the credit union to release your title to the insurance company. This is a financial burden because you are now in a position of needing to purchase another vehicle and having to come up with cash to pay off a vehicle that is no longer drivable.
GAP is added to your loan balance at the beginning of the note and will only change your monthly payment by a few dollars. The peace of mind is worth it.
Be sure and ask your loan officer about GAP when purchasing your next vehicle.
Debt Protection
Life debt protection and Disability debt protection are products we carry to pay for your loan in the event you are totally disabled or die during the term of your loan.
Why you should cover your loans? We hear consistently that our members feel they are over insured but when you actually have a tragedy you find out that your insurance does not go as far as you expected. In today’s society, people live on credit. They have a house payment, two car payments, vehicle insurance, utilities, food, daycare and credit cards with no end in sight and these are just the basics. If you are the primary income, can your spouse survive without you? $300,000.00 in life insurance sounds like it would be enough but when you have to pay for funeral expenses and outstanding debt, the level of comfort for your loved ones has diminished. Life debt protection will only add a few dollars to your payment and sometimes just cents, depending on your loan amount. Why wouldn’t you take out Life debt protection?
Disability debt protection makes your payments while you are out on sick leave. Being out due to an illness or injury means extra expenses with co-pays, out of pocket medical expenses and medications. Having disability protection will help you meet your monthly obligations. You will not have to worry about making your loan payments; therefore, those funds can be used to help you with your extra monthly expenses. Any funds you draw from your sick leave can be used to maintain your normal daily living. Being off work a long period of time without disability protection can cause a hardship that you or your family may not be able to recover from.
Involuntary unemployment debt protection will make your payments should you become involuntarily unemployed as a result of a layoff, general strike, termination by employer, unionized labor dispute, or lockout.
- Single Life Debt Protection only applies to the primary debtor. If you were to die while you are insured, the policy will pay the principal balance of your loan on the date of your death, not to exceed the maximum amount of protection coverage payable under the certificate.
- Joint Life Debt Protection applies to the primary debtor and the co-debtor. The co-debtor can only be a spouse who has signed the loan contract and is jointly liable for the debt. If either the primary or co-debtor die while you are covered, the policy will pay the principal balance of your loan on the date of death, not to exceed the maximum amount of coverage payable under this certificate.
- Disability Debt Protection only applies to the primary debtor. If you become totally disabled as a result of sickness or injury while covered and continue to be totally disabled for a least the number of consecutive days in the waiting period shown in your certificate, the policy will pay a monthly benefit to the creditor. Your disability benefit will be based on your insured indebtedness on the date the total disability occurs, not to exceed the maximum monthly disability payable under your certificate.
- Single Involuntary Unemployment Protection applies to the primary debtor. If the debtor becomes involuntary unemployed while you are covered, the policy will pay a monthly benefit to the creditor. Not to exceed the maximum monthly benefit payable under your certificate.
- Joint Involuntary Unemployment Protection applies to the primary debtor and co-debtor. The co-debtor can only be a spouse who has signed the loan contract and is jointly liable for the debt. If either the primary or co-debtor becomes involuntary unemployed while you are covered, the policy will pay a monthly benefit to the creditor. Not to exceed the maximum monthly benefit payable under your certificate.
Debt Protection premiums are added to your loan balance each month based on your current balance. The premiums for the term of the note have been amortized in your contract, therefore your payment has been adjusted to compensate for the monthly add on.
Be sure to ask your loan officer about Debt Protection for more information.
Collateral Protection Insurance
Collateral Protection Insurance (CPI) protects the credit union when a member does not carry comprehension and collision insurance. Texas law requires you to carry liability insurance and the lien holder (credit union) requires you to carry comprehension and collision insurance. If we do not receive a policy from your insurance provider, the credit union has a relationship with a third party carrier that covers the credit union during the time periods you are not covered. The premium is added to your loan account thus increasing your monthly payment. If you were to have damage to your vehicle, CPI would cover the repairs protecting you and the credit union from a loss.
To prevent CPI from increasing your payments, contact your insurance company and have them email or fax a copy of your policy. Your liability card will not work as proof of insurance because your policy must show the following:
- Effective date: The effective date of the policy must be effective the day you purchased your vehicle. If you have changed carriers or lien holders, the policy must pick up from where your previous policy was canceled. There cannot be any lapse in time.
- Year, Make, Model and Vehicle Identification Number (VIN): Verify your policy information with your contract that you signed with the credit union. If there is one number incorrect on the VIN or the vehicle description is incorrect, this will cause a mismatch and you could be charged CPI.
- Deductibles: Deductibles cannot exceed $500.00 for comprehension or collision. If you deductibles are higher than $500.00, you could be charged CPI.
- Lien holder: The lien holder information must be listed and attached to the vehicle for collateral. If you have refinanced your vehicle from another institution, contact your insurance carrier and change the lien holder information to:
The Peoples Federal Credit Union
PO Box 9335
Amarillo, TX 79105
Attn: Vehicle Insurance Department
Once CPI has been added to your loan account, there is no refund; therefore it is very important to respond to any insurance letters sent to you. If you receive a letter, one of the items listed above is missing or incorrect. If we are able to get a policy corrected before the credit union is charged for the coverage, we may not have to pass this cost onto you.
Please email: department.loan@tpfcu.com or fax: 806-242-1137 your policy.
