Short Term insurance on assets financed

Short Term insurance on assets financed Where an asset has been financed by the Credit Provider, it is often a requirement that a complete short term insurance³ is maintained. In practice many consumers have cancelled their short term insurance long before they have applied for Debt Counselling notwithstanding the contractual obligation to maintain a short term insurance policy to protect the assets financed. The absence of such a policy not only increased the risk for the Credit Provider, but it increases the risk for the consumer who has applied for Debt Counselling. Should the consumer be involved in an accident or if the vehicle is stolen and not covered it places the over-indebted consumer in a worse financial position. It is therefore in the interest of the consumer that insurance of assets be examined during the Affordability Assessment. If Debt Counsellors make sure that insurance is in place this could improve the probability that the debt review will be successful and this will make sure that the consumer complies with the terms of the agreement with Credit Providers. Debt Counsellors should verify the need for insurance on debt included in Debt Counselling. This is normally a contractual obligation. The premium for insurance should be included in the proposed budget of the consumer and confirmation of insurance should be forwarded to the relevant Credit Provider. In addition, it is recommended that the amount required for such insurance should be collected by the appointed Payment Distribution Agency and paid over to the Credit Providers or Service Providers. Debt Counsellors are required to monitor monthly payments of these amounts. Any increases of the amount required for this insurance should be catered for and should be included in the annual review conducted by the Debt Counsellor.