If insuring property that you’ve obtained through credit is something that you’re required to do or are interested in doing, it’s good to know about credit property insurance. There are four forms of credit insurance available to borrowers, and it allows individuals to feel secure in knowing that their balance will be paid if they’re unable to pay it.
Credit Property Insurance Basics
Credit property insurance is one of the routes you can take for insuring property that you’ve obtained through credit. However, it works a little bit differently than the other forms of credit insurance – life, disability and involuntary employment. For one, it insures the collateral that you’ve used to obtain your property. Also, it can insure the goods that you’ve purchased in connection to an open-end credit transaction.
Also, slightly different from the other forms of credit insurance, credit property insurance usually pays off either the lesser of the value of the item you owe or the balance of your loan. However, like the other forms of credit insurance, when you decide to purchase it, it is usually tacked on to the balance of your transaction.
Other Credit Property Insurance Details
Here are a few facts that can make your life a little easier when deciding whether to purchase credit property insurance:
- Higher balances merit higher premiums. Before becoming insured, it’s good to know that the more you owe transaction-wise, the higher your premium will be.
- Buying from the lender is not required. While your lender may require that you purchase this type of insurance, it’s good to know that you are not required to buy it from that lender, no matter what they say.
- It can be canceled. As long as you cancel it within 30 days of purchase, you are entitled to a full refund of your premium. If you pass the 30-day mark, you will only be entitled to a prorated partial refund.
- Avoid force-placed insurance. This type of credit property insurance is forced upon you by the lender. It’s best to try to avoid this from happening because it usually results in a higher premium.
If credit property insurance is on your agenda, then it’s important to conduct as much research as possible to ensure you get the best bang for your buck.