Complaint Review: Collateral Protection Insurance Agency - Huntsville Texas

Collateral Protection Insurance Agency Inc. (CPIAI) of Huntsville, Texas, is a forced put collateral insurance company used by creditors to insure that their collateral is protected against a loss. I completely understand the need for this type of coverage in the event a debtor fails to maintain financial responsibility (car insurance) for a purchased asset such as a vehicle. The nature of the business and its intent is both relevant and necessary. However, if you try to prove that your vehicle was covered by the mandatory automotive coverage, once they apply the $700.00 per year insurance premium to your case, no proof of financial responsibility will result in a full refund.

I financed a vehicle through a federal credit union. The vehicle in question had full coverage insurance since the day it was purchased over 10 years previously. The vehicle was used as collateral for another purchase. All documentation to include full coverage insurance was provided to the creditor prior ro approval of the note. Several months later, as I was reviewing my account to monitor the progress of repayment, I found a $700.00 charge on my account. First and foremost, this was in violation of Texas law as the law clearly states in, TEX FI. CODE ANN. § 307.052 : Texas Statutes - Section 307.052: CREDITOR DUTIES,  the procedure that must be carried out in notification to the debtor. Without reprinting the statute, and to paraphrase, it states that the debtor must be notified within 31 days of purchase of the forced collateral protection insurance of the action taken against them. Additionally, the terms of the insurance, payment methods, duration, the total cost, etc. must be presented in letter form to the debtor. This was not conducted. Therefore I was not even made aware of the charge until long after its application to the original note. Furthermore, the law does not allow the original loan documentation to serve in lieu of proper notification.

Here is where they get really thorny. When I contacted CPIAI directly asking them why and how I was charged this $700.00 when I have had full coverage insurance on this vehicle for over a decade, they stated that it was because they did not have on record, an insurance policy stating that the creditor was the lien holder. Essentially they charged me $700.00 for what they felt was some missing type on a piece of paper. I then furnished them a copy of my insurance policy that in fact did show them as the lien holder and they stated that because there was a notation of a change, they assumed they were the change made and would only refund up to the notification of date changed in section 2. When I called them back and stated that they were making an assumption, that other drivers or vehicles could have been added to the policy, they said that because of previous erroneous copies that they had contained an error of not having the creditor as the change, they were going to assume that this was the change referenced in section 2. I am now forced to take them to a small claims court to recover the duplicated charges for insurance beyond the amount they refunded.

Even in the midst of after being notified of this error, I repeatedly sent e-mails with the properly scanned documents enclosed to their incoming mail processor, they would verbally verify receipt when called, and then send notification a week later that they did not receive the documents thereby allowing them to charge you.

If you are purchasing, financing, refinancing, or using assets as collateral with any creditor organization, ESPECIALLY a federal credit union. Verify that you are not in any way running the risk of dealing with CPIAI. Full coverage doesn’t matter if there is an error. Even if your insurance company sends them notification of full coverage, if there is so much as a single date break or error regardless of the continuation of coverage. You will be charged, and the predatory nature of this company will become very apparent when requesting refunds. Buyer beware.