Vendor's Single Interest (VSI)

Explore our Vendor's Single Interest solution, a cost-effective alternative to Collateral Protection Insurance that reduces the risk of uninsured auto collateral after loan closing.

Vendor's Single Interest | Blanket VSI

Also known as Blanket VSI, this policy eliminates the need for lenders to track insurance policies and force-place Collateral Protection Insurance (CPI) after loan closing. While lenders must verify and secure the borrower's primary insurance at loan closing, ongoing insurance tracking is not required. Coverage automatically extends to all existing loans from the moment the policy takes effect.

By choosing a Vendor's Single Interest policy, lenders can ensure their financial interest in the collateral remains protected, even if the borrower cancels, fails to renew, or allows their insurance to lapse.

This cost-effective alternative to Collateral Protection Insurance (CPI) streamlines loan servicing by eliminating the need for tracking renewals, sending notification letters, and force-placing coverage. It helps protect the lender’s interest in the vehicle, supports regulatory compliance, and reduces financial risk.

Features
Benefits
Coverages

Eligible Collateral: Autos, Vans, Light Trucks, Motorcycle, RV, Watercraft, Mobile Home, Heavy Trucks with an option to add additional collateral types.
Passing of Premium: depending on State Regulations, lenders may pass the premium cost to the borrower.
Uninsured Physical Damage Coverage: Protects the lender from uninsured damage or theft of the loan collateral, occurring before or after repossession.

Skip & Confiscation: protects the lender against loss of collateral when borrower and vehicle cannot be located or when the vehicle has been seized by a public authority.

Security Interest Non-filing: Protects the lender from a lien filing error or omission preventing repossession and sale of the collateral.
Modified Actual Cash Value (GAP) coverage pays the difference between a vehicle’s actual cash value (ACV) and the principal loan balance in the event of a total loss.

Flexible Limit of Liability offers lenders options based on the market and lending procedures.

Flexible Deductible Options: gives the lender the ability to reduce premium rates.

Assumption of Coverage: provides coverage on the entire existing loan portfolio at policy inception with no additional upfront cost.

Assumption of Coverage ensures seamless portfolio protection from inception.
Eliminates the need for post-loan-closing insurance tracking.
Prevents borrower disputes over false CPI placements.
Eliminates negative borrower interactions regarding insurance documentation.
Simplified administration with zero data file required.
Enhances audit and compliance reviews by ensuring insurance full portfolio coverage.
Provides an easy, efficient claims filing and settlement process.
Helps reduce loan defaults and the need for loan rewrites.
Minimizes charge-off expenses.

Physical Damage & Theft Protection: provides blanket all-risk coverage for damage or theft prior to repossession up to the policy limits.
Skip and Confiscation Protection: covers losses caused by the inability to locate a borrower or obtain collateral seized by a public official.

Modified Actual Cash Value (GAP): pays the difference between the actual cash value (ACV) of a vehicle and the principal loan balance in the event of a total loss.

Non-Filing (Errors & Omissions): covers losses caused by improperly filed liens or unfiled liens on covered collateral.

Repossessed Physical Damage: covers physical damage losses sustained within a specific timeframe after repossession of the collateral.

Optional Coverages Available:

- Mechanical Breakdown Expense.
- Broad Form Skip.
- Mechanics Liens.
- Repossession Storage Expenses.
- Additional repossession and return expenses.
- Primary insurance deductible up to maximum limits.

Vendor's Single Interest (VSI) insurance, also known as Blanket VSI insurance, is a type of insurance policy that protects a lender's financial interest in collateralized property when the borrower fails to maintain adequate insurance coverage.

Lenders use a Blanket VSI policy to protect their financial interest in collateralized property, such as vehicles, in the event that the borrower's insurance coverage lapses or is insufficient to cover the outstanding loan balance.

Traditional insurance policies are typically purchased by the borrower to protect their own interests, while a Blanket VSI insurance policy is purchased by the lender to protect their financial interest in the collateralized property.

A Vendor's Single Interest policy, or Blanket VSI insurance, covers the lender's financial interest in the collateralized property against risks such as theft, damage, or loss that could result in the borrower's inability to repay the loan.

Blanket VSI premium can be applied as a one-time, per new loan charge or a monthly charge based on the outstanding balance of the loan portfolio. In many states, the per new loan charge may be passed onto the borrower at time of loan closing.

Blanket VSI helps lenders mitigate the risk of financial loss by ensuring that their interests in collateralized property are protected, even if the borrower's insurance coverage is inadequate or nonexistent. It provides peace of mind and helps safeguard the lender's investment.

Premiums for Blanket VSI are typically based on the lenders outstanding balance of the loan portfolio, number of loans, lending footprint and loss history. Other factors may be considered such as loan term, or lending limit per collateral.

Repossession of the collateral will trigger a claim. In the event of a covered loss, the lender may file a claim in which an adjuster will assesses damage and determine the claim amount to be paid, up to the policy limits.

Lenders evaluate Blanket VSI insurance providers based on factors such as the provider's reputation, financial stability, claims processing efficiency, coverage options, and pricing.

Common challenges of lenders considering a Blanket VSI policy include, but are not limited to tracking of insurance, complying regulatory requirements, ensuring each collateral is insured, and staffing issues.

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Consumer Lending