22 Nov Everything You Need to Know About VSI Insurance
Vendor’s single interest (VSI) insurance is designed to protect lenders if an uninsured vehicle is damaged or destroyed. Learn more about the coverage options available under a VSI policy, what type of collateral can be covered, and what lenders should know before purchasing a VSI insurance policy of their own.
What Does VSI Insurance Cover?
VSI insurance is a blanket lenders single interest insurance policy that provides coverage for an entire portfolio without requiring insurance tracking on each loan to determine if there’s an insurance lapse, VSI insurance can provide coverage if the car is damaged before or after repossession. This single interest coverage also protects lenders if the borrower absconds with the vehicle, and the collateral can not be found.
Though lenders are free to customize their VSI coverage to their demands, most VSI insurance provides coverage for the following events:
- Uninsured damage or theft: When the insurance lapses and the vehicle is damaged or stolen.
- Skip coverage: Provides protection if the vehicle cannot be located.
- Security interest non-filing: When a lender cannot repossess because of a defect in the title or lien registration.
- Superior lien issues: Often caused by errors or omissions in the lien and title records, either by your staff or the DMV.
- Mechanic lien costs: Pays repairs and storage charges owed to repair shops, etc.
- Repossession coverage: Covers uninsured damage or theft post-repo.
VSI comprehensive coverage can apply to both consumer collateral and commercial equipment and vehicle loans.
What are the Benefits of VSI Insurance?
Aside from peace of mind, VSI policies deliver several different benefits for the lender. These plans reduce charge-offs for an entire portfolio without needing the lender to engage in individual tracking, which can be time-consuming and require strong attention to detail. In many states, lenders can benefit from disclosing and passing along the cost of VSI to the borrower without affecting the interest rate. Also, unlike force-placed premiums that are often difficult to collect, the VSI insurance cost can be charged upfront when the loan is made. This can be a cost-effective way for lenders to significantly reduce the effort associated with tracking insurance.
What Types of Consumer Loans are Covered by VSI Policies?
VSI policies protect a broad range of loans. Lee & Mason offers VSI insurance policies that cover the following types of consumer loans and lease collateral:
- Cars, Vans, Light trucks
- Motorcycles, ATVs and Snowmobiles
- Watercrafts, including Jet Skis
- Recreational Vehicles, Mobile Homes (not real estate)
- Optional: Commercial Vehicles and Equipment
Contact Lee & Mason for Expert Financial Services
Our broad range of coverage options ensures that every lender can select vender’s single interest insurance tailored to their own needs without paying for unnecessary protection. For over 60 years, Lee & Mason has been providing VSI financial solutions to better serve our customers while reducing their risk.
Still wondering what VSI insurance is? Our experienced and talented management team backed by dedicated staff members can help. Learn more about the coverage options available by giving us a call or visiting our website to get in touch today!