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Protects
the lessor or lending institution in the event that the lessee's
primary physical damage insurance is cancelled or is inadequate
to cover the lessor's loss. Contingent Physical Damage is available
for both equipment and automobiles.
Structure
The lessor requires
insurance protection as part of the lease contract. The lessor may
or may not have an insurance tracking system in place. If at the
time of loss, the lessee is either uninsured or underinsured the
lessor will have protection from financial loss due to damage or
theft of its leased equipment.
Features
- Provides
physical damage insurance only; does not provide liability coverage
- Coverage
limits are the least of the cost of repair, actual cash value,
and the net payoff of the lease
- If the equipment
value is greater than the lease balance and the equipment is a
total loss, Contingent Physical Damage covers the net payoff of
the lease
- Coverage
is "single interest," meaning only the lessor may file
a claim. Payment default and repossession are conditions for a
covered loss and Contingent Physical Damage is excess of all other
insurance available.
- Coverage
is generally written on a monthly reporting form or for an annual
period
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