Blanket Lender Single Interest (LSI) Insurance is a specialized insurance product designed to protect lenders' interests in collateralized loans.
Unlike Vendor Single Interest (VSI) Insurance, which covers individual loans, Blanket LSI Insurance provides coverage for an entire loan portfolio.
Here are some of the key considerations for organizations seeking more protection on their portfolios:
- Cost: Blanket VSI involves charging a small premium to the borrower at loan origination, which can be excluded from the APR in most states. The premium is then used to pay for collateral and skip losses that occur after repossession. Miniter group delivers our blanket VSI programs with a unique approach that ensures rate stability to the lender in both good and bad economic cycles.
- Reduced Workload: A blanket policy like this means no insurance tracking, no communication issues with borrowers, no employee time needed to maintain.
- Risk Mitigation: Blanket LSI, or Blanket VSI as it is sometimes termed, has two highly attractive risk mitigation factors:
- It will reduce charge-off expense
- It will add more basis points to portfolio profitability
How do we know? Miniter Group is one of the largest providers of this product in the United States, and has been doing so for over 3 decades. Alongside our sophisticated Borrower-CentricSM Insurance Tracking software, we can aggregate the data to see how it positively affects portfolios.
Understanding the Key Benefits of Blanket Lender Single Interest (LSI) Insurance
There are four types of Vendor’s Single Interest (also known as Lender Single Interest) coverages.
1. Physical Damage and Theft
Blanket All-Risk Physical Damage protects the lender against losses due to uninsured and damaged repossessed vehicles.
2. Skip & Confiscation
Protects the lender against loss due to the inability to locate the collateral (or any borrower or co-borrower) when a public office prevents the lender from recovering collateral.
3. Instrument Non-Filing
Provides coverage if a public authority prevents the lender from repossessing the vehicle or retaining the proceeds because the lender has not recorded its lien or the state registry has not shown the named insured’s interest.
4. Repossessed Vehicle Coverage
Provides Blanket All Risk Physical Damage coverage to damage losses that occur after repossession of the vehicle.
Conclusion
Blanket Lender Single Interest (LSI) Insurance offers comprehensive protection for lenders' interests in collateralized loans across entire loan portfolios. For even more specifics about its history, popularity and more, read our “Complete Guide” here.
Navigating the fine print of Blanket LSI Insurance policies may seem daunting, but it does not have to be.
Our expertise and desire to support this industry means we’re here to answer your questions any time. Please do not hesitate to reach out directly using our Ask Us Anything resource!
