by Tiger Okeley, an Executive Board Member for Indiana Finance Company and Oak Motors. Tiger has over 40 years of expertise in the Buy Here Pay Here industry. He is dedicated to providing innovative transportation solutions and empowering underserved customers through socially and financially responsible practices.
Buying a car involves more than choosing the right vehicle and monthly payment. You also need to think about insurance and vehicle protection, which can be one of the more confusing parts of the process.
You may hear terms like “full coverage,” “CPC” and “PLPD” when financing a vehicle. These options can help meet different insurance and loan requirements, but they don’t provide the same protection.
Here’s what each term means and what to consider when deciding which option may work best for you.
What Is Full Coverage Auto Insurance?
“Full coverage” is a common term for an auto insurance policy that includes multiple types of protection. It isn’t one specific policy, so what’s included can vary depending on the insurance company and the coverage you choose.
A full coverage policy will include:
- Liability coverage, which pays for another person’s injuries or property damage when you are responsible for an accident
- Collision coverage, which pays to repair or replace your vehicle after a covered collision
- Comprehensive coverage, which covers non-collision losses such as theft, vandalism, fire, hail or damage caused by an animal
You can also add benefits such as uninsured motorist coverage, roadside assistance and rental reimbursement, depending on the policy.
Insurance companies use factors such as your credit, driving history, age, gender, location, claims history and previous insurance coverage to determine whether you qualify and how much you will pay. Drivers with excellent credit, clean driving records and established insurance histories often qualify for lower premiums and deductibles.
Drivers with credit challenges, accidents, lapses in coverage or other risk factors often face higher premiums, larger deductibles or fewer options. Some drivers may not qualify for full coverage at all.
Many full coverage policies also only cover the people listed on the policy. If someone else is driving the vehicle when an accident happens, the insurance company can deny coverage if that driver does not meet the policy’s requirements.
What Does PLPD and CPC Mean?
PLPD stands for personal liability and property damage. It’s a term commonly used for basic liability insurance.
Liability coverage protects other people when you cause an accident. It pays for another driver’s medical bills or repairs to their vehicle, up to the limits of your policy. Indiana requires drivers to maintain minimum liability coverage, but dealerships are not required to enforce this.
PLPD doesn’t cover damage to your own vehicle, which is why it’s often combined with CPC.
Collateral Protection Coverage (CPC), more commonly known as CPI, protects the financed vehicle against physical damage or total loss regardless of how it happens. The only exceptions are when the vehicle’s owner intentionally causes the damage or the vehicle is being used for illegal activity.
CPC also covers the vehicle when someone other than the owner is driving, as long as the driver and the use of the vehicle follow the terms of the program. Unlike many traditional insurance policies, the driver does not have to be individually listed on the coverage.
In simple terms, PLPD protects you against liability to other drivers, while CPC protects the financed vehicle from physical damage or total loss.
Which Coverage Option Is the Better Fit?
Traditional full coverage may be a better fit when you qualify for preferred rates and want liability and vehicle protection through one insurance policy.
It may work well if you:
- Have excellent credit and a clean driving history
- Qualify for a preferred insurance class based on your age, gender and other underwriting factors
- Have an established policy with a preferred insurance provider
- Have homeowners, renters, boat, second-vehicle or other policies you can bundle
Customers who meet these qualifications may be able to secure full coverage at an affordable rate. However, it can be extremely expensive for drivers with credit challenges, accidents, insurance lapses or limited insurance history.
CPC paired with PLPD may be a better fit when traditional full coverage makes an otherwise manageable vehicle payment difficult to afford.
This option may work well if:
- Full coverage quotes are too expensive for your monthly budget
- Your credit or driving history prevents you from qualifying for affordable full coverage
- You need more flexibility in meeting your loan’s vehicle protection requirements
- You don’t want to make a down payment for vehicle protection
- You want the flexibility to switch to qualifying full coverage later
- You’re comfortable maintaining a separate liability policy
CPC doesn’t require a down payment. Customers make regular CPC payments while the coverage remains active and can switch to qualifying full coverage if their circumstances change.
Questions to Ask Before Choosing
Before choosing an insurance or vehicle protection option, make sure you understand what you’re paying for. A few helpful questions include:
- What types of damage or losses are covered?
- How much is the deductible?
- Who is allowed to drive the vehicle?
- What happens if the vehicle is declared a total loss?
- Are towing, roadside assistance or rental vehicles included?
- Are there any important exclusions?
- What will the coverage cost each month?
- Is there a down payment or upfront cost?
It’s also a good idea to include insurance in your budget before purchasing a vehicle. Your car payment is only one part of the total cost of ownership. Insurance, gas, maintenance and repairs can all affect what you’ll spend each month.
Finding the Right Option for Your Situation
Traditional full coverage can work well for customers who qualify for preferred rates and want all their coverage through one insurance company. CPC paired with PLPD offers another affordable and flexible way to protect a financed vehicle while meeting Indiana’s liability requirements.
Oak Motors has spent more than 40 years helping Central Indiana drivers navigate the car-buying and financing process. Our team can explain the vehicle protection requirements connected to your financing and the CPC option available through our Ultimate Protection Plus Program.
Contact your local Oak Motors dealership to learn more.
Categories: Buying Information