by raising his collision deductibles to $1,000 from $250 - State Farm
by raising her collision deductible to $1,000 from $500 - PEMCO
by raising his collision deductibles to $1,000 from $250 - Horace Mann
Here Are The Answers To The Most Common Questions Asked
Before reading this FAQ document, the reader should view the Collision Deductible Reserve Plan (CDRP) product brochure. This will provide a general understanding and orientation to the primary features and benefits of the CDRP. Also, as relevant questions arise, this FAQ document will be updated and re-posted on this website. Check back often for the current version of this document.
Have a question? Browse the list below to quickly find your answer.
Common Questions
Q: What does CDRP stand for?
A: CDRP means "Collision Deductible Reserve Plan."
Q: What is the CDRP?
A: The CDRP is a service that enables consumers to safely raise their automobile collision insurance deductibles to $1,000, thereby lowering their overall insurance premium and generally saving consumers thousands of dollars over the life of their driving career.
Q: What is collision insurance?
A: Collision insurance is one type of insurance many consumers purchase for their automobiles. In the event of damage to a vehicle resulting from a collision, collision insurance pays for the repairs to the vehicle after the consumer pays their collision insurance deductible.
Q: What is a deductible?
A: A deductible is the portion of a loss paid by the consumer. For example, if you have a $1,000 collision insurance deductible, and you are involved in a collision that requires $5,000 worth of repairs to your vehicle, you would be required to pay $1,000 (your collision insurance deductible) before the insurance company will pay the remaining $4,000 to the repair shop.
Q: Why would I want to have a $1,000 collision insurance deductible?
A: By having a higher deductible, you will pay less for your insurance. Most consumers carry a $250 or $500 collision insurance deductible. By raising one or more collision insurance deductibles to $1,000 consumers can save up to 40% on their overall insurance premium.
Q: How much will I save if I raise my collision insurance deductible to $1,000?
A: How much you will save by raising one or all of your collision insurance deductibles to $1,000 depends on a variety of factors such as your age, make and model of your vehicle(s), the number of teenage drivers on your policy, your driving record, etc., just to name a few. Although every person's actual savings is different, most consumers save from $10 to $75 per month.
Saving just $10 per month over a 30 year driving career, could result in more than $15,000 to the consumer if that $10 is consistently invested and earned a hypothetical annual rate of return of 8%. Saving $25 per month, and consistently invested over a 40 year driving career earning the same 8%, could result in more than $35,000 to the consumer.
Q: Why can't I just save $1,000 myself...why do I need a CDRP?
A: Trying to accumulate $1,000 at a rapid pace, after raising one or more collision deductibles to $1,000, introduces the “additional risk” of having to pay a high collision deductible before you have saved $1,000. And, since most people do not have an extra $1,000 available to spend in case they have a collision, the CDRP ensures that a high collision deductible can be paid even before you have saved $1,000.
For example, let's say you would save $25 a month by raising your collision deductibles to $1,000. Saving $25 a month, it would take 40 months to save $1,000 - assuming you maintain the discipline to save the $25 every month.
That 40 month window is called the accumulation period. In other words, it would take you 40 months to accumulate $1,000 on your own, if you saved $25 every month and put that money in a savings account. If you had a collision in month three, you would have saved $75, but would still need $925 to pay your collision deducible.
The CDRP will provide interest free money - up to a full $1,000 - during the accumulation period that you may use to pay your collision deductible if you need to before you have saved $1,000; eliminating your risk of having to come up with any shortfall.
Q: How does the CDRP work?
A: The goal of the CDRP is to help you set aside $1,000 into your CDRP account. To begin, simply select one of the available contribution plans to help you set aside $1,000 in your CDRP account. Most consumers choose a contribution plan of $50 per month or the lump sum plan of $650. The Company will electronically collect your contribution each month until $1,000 has been deposited into your CDRP account - at which point your CDRP is considered mature. Once your CDRP is mature, the Company no longer collects your contribution payment and the $25 or $50 that was being contributed to your CDRP account is now back in your budget.
At this point, if you have a collision that requires you to pay a deductible, you simply retrieve the contributions from your CDRP account, pay your collision deductible, and then start the rebuilding process under your original contribution plan.
Q: What if I need to pay a collision deductible before I have $1,000 in my CDRP?
A: This is the real benefit of the CDRP. All clients and CDRP accounts in good standing, meaning their account is not in default in any way, are eligible to receive an advance up to a maximum of $1,000 interest free for the purpose of paying a collision deductible before their account is mature.
For example, if you started your CDRP account on a $50 per month contribution plan, and two months into your accumulation period you have a collision, you will have $100 in your CDRP account ($50 x 2 months = $100) but need to pay a $1,000 deductible. In this scenario, the Company will provide you with an interest free advance for the full amount of your deductible. You will simply sign a note that says you agree to pay back any advance at a minimum of $25 per month.
All monthly advance repayments are in addition to any required plan contributions that still need to be made; however, you will not have to pay any interest or any fees on the repayment of any advance.
Q: Do I have to change my insurance agent or insurance company to use the CDRP?
A: No, you do not have to change your insurance agent or your insurance company in order to use the CDRP.
Q: If I have more than one vehicle, do I need more than one CDRP?
A: No, one CDRP covers all vehicles in the home and all direct dependents (including a spouse and children up to age 18 if living at home).
Q: What if I sell one or all of my cars and buy a new one?
A: That's OK, buying or selling a car does not affect your CDRP in any way. Simply select a $1,000 collision insurance deductible when you purchase your new vehicle to continue paying the least amount possible for your collision insurance.
Q: What if my bank, credit union, or finance company requires me to have a collision insurance deductible of $500 or less on my new or new-used vehicle?
A: Some banks, credit unions, and finance companies have an internal policy that restricts clients from carrying collision deductibles in an amount greater than $500. IDA has an Exception to Policy Request Form that clients may complete and send to their lending institution requesting an exception to policy and be allowed to carry a higher collision deductible because they have a CDRP account. Our experience shows that most lending institutions readily accept their customers request for an exception to policy and allow them to carry higher collision deductibles.
Q: Is the CDRP an investment?
A: No, the CDRP is not an investment of any kind and there is no investment return associated with your CDRP. Your benefit is the increased cash flow from paying less for your insurance each month.
Q: Is the CDRP insurance?
A: No, the CDRP is not insurance, as it does not insure your collision insurance deductible. The CDRP simply provides interest free money for you to use to pay a collision deductible should you need to pay a collision deductible before your CDRP is mature.
Q: What does the CDRP cost?
A: There is a one time setup fee of $25 that is charged with each CDRP account that is due with the first contribution. There is also a deferred management fee of $325 due when the CDRP account is terminated, but, because the CDRP is designed to stay with you for the remainder of your driving career, the Company does not deduct the management fee from your CDRP account until the account is terminated - there is no expiration to your account - you keep your CDRP account for as long as you are driving. Over a 30 year driving career, the deferred management fee will average about $0.90 per month. And, if you should become unable to drive for any non-criminal reason (e.g. medical, illness, injury, age, etc.) and no longer need your CDRP, the deferred management fee will be waived by the Company.
Q: How do I start my CDRP?
A: Through an authorized IDA Associate or Representative, simply enroll in the CDRP. An authorized IDA Associate can complete a CDRP application or, even easier, you can complete the enrollment process online through the Associate's website - just click here to enroll.