Life Cycle of a Loan in SIS

Throughout its term, an auto loan may exist in several states with regards to physical damage coverage. SIS recognizes each state and reacts according to the preferences of each lending institution. When the insurance company issues a PD policy, the lender is named as lienholder (the lienholder enjoys first rights to any settlements for loss claims on the vehicle or monies derived from the proceeds of the vehicle's sale). All changes in insurance status are reported to the lienholder and the loan falls into one of several coverage states. SIS displays the insurance status of each loan when viewed.

• New Loan: When a borrower finances a car, evidence of adequate PD insurance is normally required within a fixed window of time. During this "new loan grace period", SIS will ignore any lack of insurance.

• DI Coverage: A valid PD policy has been recieved and entered into SIS, and the policy is furnished by the borrower to establish dual interest. PD coverage is often purchased and renewed in six-month increments, and is sometimes called "continuous" coverage. It is assumed that these policies will be valid for the life of the loan. For new loans, an auto insurance agent may issue a binder for PD coverage on the vehicle until a formal policy can be arranged. Binders are normally valid for 30 days. The insurance company will notify the lienholder of the binder's coverage dates. The binder is usually considered a precursor to a continuous policy.

• DI Expired: The PD coverage dates have been exceeded and no renewal of coverage has been received. The loan will enter the letter cycle in the next processing cycle. When notification of renewal is received, the loan returns to the DI Coverage state and all further activity is halted.

• DI Canceled: The borrower's insurance company has elected to cease coverage on the vehicle and no renewal of coverage has been received. The loan will enter the letter cycle in the next processing cycle. When notification of renewal is received, the loan returns to the DI Coverage state and all further activity is halted.

• SI Policy In-Force: A single interest policy has been issued and is currently active.

• SI Policy Expired: A single interest policy has been issued and its expiration date has been exceeded. The loan will enter the letter cycle in the next processing cycle. When notification of renewal is received, the loan returns to the DI Coverage state and all further activity is halted. If another single interest policy is issued, the loan returns to the SI Policy In-Force state and all further activity is halted.

• SI Policy Canceled: A single interest policy has been issued but has been canceled at the request of the insurer or lender, and no evidence of the borrower's PD coverage has been received.The loan will enter the letter cycle in the next processing cycle. When notification of renewal is received, the loan returns to the DI Coverage state and all further activity is halted. If another single interest policy is issued, the loan returns to the SI Policy In-Force state and all further activity is halted.

• Hi Balance Waive: The loan balance exceeds the limits of the lender's single interest master policy and cannot be entirely covered.

• Low Balance Waive: The loan balance is below a preset limit for which PD coverage is required by the lender.

• Waived: The lender has specifically declined single interest protection for this loan and collateral.

• Matured: The loan's maturity date has been exceeded, and no extension has been entered. The loan will be automatically deleted after a preset number of days.

This page last updated 4.6.98