VSI stands for Vehicle Single Interest and the auto insurance related to it is a blanket auto insurance meant for lenders, which consists of many flexible programs that cover different kinds of risks like repossessed property, physical damage, non-filing of errors, skip, omissions etc. This program is known to offer coverage for loans that already exist as well as for those that are about to be processed.
The other benefits offered by VSI Auto Insurance and some of its key features are as follows:
- Lenders who buy this insurance policy from an online service provider will be exempted from keeping tabs on their insurance and continuing to follow things up.
- This insurance policy is also known to offer optional coverage, which may be comprised of risk assumption, repossession expensive reimbursement, mechanic's lien etc.
- The premiums that a lender will have to pay will depend on a portfolio's outstanding balance or the loans that are granted each month.
- By negotiating with their insurance provider, those keen on buying a VSI auto insurance policy can pitch for low deductibles and they may even be allowed to offer other kinds of collateral. The time span for loan coverage can be extended and allowed to be long enough.
- VSI is normally associated with vehicles like motorcycles and boats but it can actually become applicable in the case of any wheeled vehicle or watercraft that is about to be financed.
- Tangible property coverage is a key feature of VSI auto insurance. Tangible property coverage is comprised of a lender's interest into a tangible property that is more commonly known as collateral. For instance, if someone buys a motorcycle for $6,000 and borrows a loan for half of the total amount, the coverage amount will be just $3,000 if the motorcycle sustains any damage. Only the lender will be given the right to file a claim for their loss with their VSI insurance provider and the buyer gets nothing.
- The other key feature of VSI insurance is default/credit loss, which helps in ensuring that the one who buys a vehicle pays their part of the loan completely and does not become a defaulter. When a buyer actually defaults on their loan payments and their vehicle is repossessed, the lender will be given the right to approach their VSI insurance provider and make a claim for reimbursement for their part of the loan. The amount that the lender will receive will be no more than what the property is worth at the time of repossession, minus the payment done by the borrower.
For this type of coverage, the lender generally pays a monthly premium to the insurer. In some states, however, lenders are given the liberty to transfer the costs to buyers either in the monthly installments or the origination fee. In this case, the buyer gets nothing.
- Lenders who opt for VSI insurance are required that they disclose this information to buyers prior to the point of sale. The VSI insurance cost, however, cannot be incorporated into the loan amount that will eventually be financed for a borrower.
With exceptionally good features to boast of, it will not be wrong to say that VSI auto insurance is nothing less than a boon for lenders.
Jacob Mathew is an insurance service blogger and holds expertise in real state insurance, flood insurance, blanket mortgage, commercial garage insurance , auto programs and many other topics. His advice on insurance programs and benefits has helped people save money and reduce risk for over 10 years.