Add-on insurance is a major part of business for many lending institutions. Add-on insurance could be gap insurance that covers the gap between what a car is worth and the amount left on a loan if a car securing the loan is totaled in an accident. Or some institutions offer involuntary unemployment insurance, where an insurance company makes payments on behalf of the borrower should the borrower lose their job. And, of course, there are also life insurance policies that will pay off loans should a death occur.
So how do you handle payments from insurance companies should the incident arise where policies are used?
The details surrounding insurance payments vary wildly depending on many factors, such as the insurance type, individual circumstances, and policy specifications. Death claims, for instance, are often paid as a single lump sum, while involuntary unemployment payments are typically sent monthly. Some insurance payments cover the whole payment or even payoff amount, while other policies may not be enough to pay off the entire loan.
All in all, every situation involving insurance payments will be unique, but GOLDPoint makes it easy to process any type of insurance payment.
Insurance payments function similarly to regular payments with a few differences:
- Insurance payments cannot be processed from the EZPay screen. They are instead processed from the Loans > Transactions > Make Loan Payment screen.
- Insurance payments are posted with an insurance type and require basic insurance information.
- One late charge is waived at the same time as the payment. This is built-in to the system. If a late charge does not proceed the payment, then no late charges are waived. Insurance payments tend to have some lag time from when the incident occurred, payments became due, and when the insurance company sends the payment. Therefore, the system reverses off the last late charge as part of the Insurance Payment. If more than one unpaid late charge exists on the loan, still only one late charge is waived, as previous late charges were likely assessed before the incident.
Payoff vs. Payment
If the payment from the insurance company would pay off the loan, you will need to use the Loans > Payoff screen in CIM GOLD to pay off the loan. In the Payoff Description drop-list, select “Paid by Insurance” to indicate the payment is from the insurance company, as shown below:
Loans > Payoff Screen in CIM GOLD
These next steps explain how to process a payment from an insurance company if the payment is not enough to pay off the loan.
First, access the customer’s account in CIM GOLD, then follow the instructions below to process an insurance payment on the Loans > Transactions > Make Loan Payment screen. Keep in mind that you must be set up as a teller and logged into CIM GOLDTeller before you can finish processing Insurance Payments.
- Select Insurance Payment in the Payment Selection field group on the Make Loan Payment screen.
- Indicate the payment type (Check/Cash) and account number (the default is the current account number, but you can select other accounts associated with the customer).
- Indicate the transaction amount (the amount of the payment) in the provided field.
- Ignore the Waive Amount field, as the system will automatically waive one late charge. If you want to waive more than one late charge, then you could enter more than one amount. If an amount is entered in the Waive Fee Amount field, the system will reduce the amount of Late Charges Due when the transaction is run.
- Indicate the Effective Date of the payment and the Insurance Type being used to make the payment. The Effective Date will be the date on the check. See the Insurance Payment help topic for a list of possible insurance types.
- Click <OK>. CIM GOLDTeller will launch an instance of the Insurance Payment (tran code 2600-01) transaction prepared with the information you already entered.
Loans > Transactions > Make Loan Payment Screen
Verify that the payment information displayed in CIM GOLDTeller is correct and click <Send>.
Insurance Payment Transaction (tran code 2600-01)
If the Insurance Payment transaction is run for at least two consecutive months, the system automatically assigns Special Comments code AB (Account being paid by insurance) to the account for Credit Reporting purposes. See the Special Comments field on the Credit Reporting screen for more information.
The history description for this transaction is the type of insurance you entered in the Insurance Type field on this transaction (for example, "A&H Ins Payment").
If you are a supervisor and want to view all accounts where an insurance payment was made, you can view the Insurance Claim Payment Report (FPSRP216) in GOLDView Plus (under Report Warehouse in CIM GOLD). It shows all accounts where an insurance payment was made. See the Insurance Claim Payment topic in DocsOnWeb for more information.