1. Review Your Current Contract
Start by reviewing your existing tracking agreement to understand:
- Contract expiration date
- Required cancellation notice (30, 60, 90 days, etc.)
- Any conversion or termination requirements
Unlike many tracking agreements, Blanket LSI coverage does not typically require a long-term contract and can generally be canceled with limited notice if your institution's needs change.
2. File Outstanding Claims Before Transitioning
Before ending your current program, review your portfolio for any eligible claims that should be submitted.
While a Blanket LSI policy assumes coverage for your existing loan portfolio, standard delinquency exclusions apply. Loans that are already 30 days or more delinquent at the time coverage begins generally are not eligible for new claims under the Blanket LSI policy. Filing eligible claims before the transition helps ensure your institution receives the full benefit of its existing coverage.
3. Allow Existing Force-Placed Certificates to Expire
In most cases, the cleanest transition is to leave existing force-placed insurance certificates in place until they naturally expire rather than canceling them immediately.
Allowing certificates to non-renew can help avoid unnecessary borrower notifications, premium refunds, and administrative work while creating a smoother transition to the new program.
4. Review Loan Agreement Language
Institutions offering VSI coverage should ensure their loan documentation includes the appropriate disclosure language along with a separate line item identifying any VSI charge.
Sample Disclosure: "Vendor's Single Interest (VSI): You are required to obtain VSI. You may obtain this insurance from any provider acceptable to the credit union. If you obtain the insurance through the credit union, you will pay _____."
Lee & Mason works closely with financial institutions during implementation to help review required disclosures and support a compliant transition.
5. Understand the Ongoing Administration
One of the primary advantages of Blanket LSI is its operational simplicity.
Rather than tracking individual borrower insurance policies, financial institutions simply report the number of eligible consumer loans originated each month (reported in arrears). Individual borrower information, VINs, and loan-level insurance data are generally not required for monthly reporting.
This streamlined process can significantly reduce administrative workload while maintaining valuable collateral protection.
6. Claims Administration
The primary (and ongoing) administrative responsibility under a Blanket LSI program is claims reporting.
Lee & Mason's online claims platform allows lenders to securely submit documentation, monitor claim status, and receive updates throughout the claims process. The system is designed to provide transparency while making claims administration as efficient as possible.
7. Consider Your Real Estate Tracking Strategy
If your institution currently uses the same provider for both auto and mortgage insurance tracking, it's important to understand how a change to your auto program may affect your real estate portfolio.
Every provider structures its programs differently, so institutions should confirm whether any existing tracking services are connected contractually or operationally before making changes.
If additional support is needed, Lee & Mason offers multiple standalone solutions for real estate lending, including:
Planning Makes All the Difference
Transitioning to a Blanket LSI program can simplify operations, improve the borrower experience, and provide an effective alternative for institutions looking to reduce administrative complexity.
Whether your organization ultimately chooses Blanket LSI, traditional insurance tracking, or a combination of both, careful planning and a thorough review of your existing program will help ensure a successful transition.
