2021 Skip Coverage Tips

February 8th, 2021

The average price of a new vehicle peaked at nearly $38,000 in 2020; and supply chain issues related to COVID-19 (Coronavirus) are likely to increase this cost in 2021 and beyond. This means that lenders carry more risk than ever before when it comes to borrowers allowing their insurance policies to lapse.

Blanket Lenders Single Interest (LSI) and Vendors Single Interest (VSI) Coverage protect lenders from any uninsured damage or theft of the collateral vehicle. In contrast, Skip Vehicle Coverage offers even more protection if the borrower or vehicle cannot be found. Continue reading to learn the critical benefits that Skip Vehicle Coverage can offer to lenders in 2021:


Skip Vehicle Coverage is one of the most critical pieces of a broader Blanket LSI or VSI policy. For decades, uninsured physical damage claims made up a larger percentage of lender charge-offs than borrower skips. However, this trend has reversed over the last decade.

Now, auto lenders face a far greater risk that the borrower will disappear with the vehicle than incur uninsured physical damage. In this case, adding Skip Coverage under your Blanket LSI or VSI policy provides a much-needed level of protection. Skip Vehicle Coverage has two tracks:

  • Lee & Mason’s professional skip tracing can recover the majority of reported vehicles. Once found, they are recovered and sold at auction to reduce the amount that will need to be charged off.
  • If a skip vehicle can’t be located, Lee & Mason will pay the lender for the collateral value under the policy’s terms, reducing the charge-off amount.

This coverage also includes a third path that is a hybrid of these two approaches. Even after Lee & Mason pays a skip claim to the lender, they will continue to try to locate the vehicle. If these efforts are successful, the recovered vehicle will be sold at auction, and any proceeds will be credited toward the lender’s Blanket LSI or VSI policy.

A truly comprehensive LSI policy doesn’t just include Skip Vehicle Coverage, but Confiscation Coverage as well. This protects the lender’s interest if a government entity seizes a covered vehicle under civil forfeiture laws.

Many states allow lenders to pass along the premium cost of a Blanket VSI or LSI policy, including Skip Vehicle Coverage and Confiscation Coverage. As long as this insurance and the associated fees are disclosed on the loan agreement, the cost can be financed and paid by the borrower over time.


It’s easy for lenders to customize Skip Coverage as part of a broader LSI policy. Lee & Mason’s Auto Skip Coverage protects just about all consumer vehicle collateral. This includes autos, vans, light trucks, motorcycles, RVs, campers, and watercraft; even commercial vehicles and equipment. These policies offer both low- and zero-deductible options that can lower premium costs — and the prices you pass along to the borrower!

When you include Skip Coverage as part of a Blanket LSI or VSI policy, you can opt into Broad Form Skip, which requires collateral locate coverage. Other optional insurances are repossession expense reimbursement and towing and storage charges, which may be a good fit to include based on your portfolio’s composition. If you’d like to learn more information about how you can benefit from Auto Skip Coverage in 2021, connect with a Lee & Mason representative today!

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