Jim Gilpin
By Jim Gilpin on May 21, 2024

Vendor Single Interest Insurance The Key to Mitigating Risks and Maximizing Profits

Vendor Single Interest (VSI) Insurance is a specialized insurance product designed to protect lenders' financial interests in collateralized loans. 

In short, it transfers collateral risk from lenders’ vehicle loan portfolios. In doing so, the lender is protected against risk on loans for things like vehicles or equipment, in the event of damage, loss, or theft.

In our decades of experience, we’ve seen time and time again that adding Vendor Single Interest Insurance serves as a crucial risk mitigation tool for lenders that also helps to maximize profits. Miniter Group is one of the largest provider of VSI insurance in the United States.


Understanding Vendor Single Interest (VSI) Insurance

Vendor Single Interest (VSI) Insurance is a type of insurance policy that protects a lender's interest in collateral assets by transferring all risk.

Unlike traditional insurance policies, which typically require borrowers to maintain coverage, VSI Insurance is purchased by the lender to cover only the lender's interest in the collateral. 

NOTE: LSI Insurance, or Lender Single Interest Insurance is often used interchangeably with VSI Insurance. Whether termed Lender or Vendor, the important part is “Single Interest” as it defines a policy that protects the interest of the lender only. 

This means that if the collateral is damaged, lost, or stolen, the lender can file a claim under the VSI policy to recoup their financial losses.

However, it is important to note that in a VSI claim payment CAN reduce the borrowers’ charge-off balance making their unpaid loan lower or eliminated. In this case, VSI can benefit a borrower as well.


Key Benefits of Vendor Single Interest (VSI) Insurance

Why carry insurance on an asset that is legally required to have insurance by the borrower?

We know the borrower is contractually obligated to maintain physical damage insurance, but a small percentage of uninsured borrowers create collateral risk for the lender. For larger institutions - and especially in market downturns or times of inflation - this risk grows.

The typical prime vehicle portfolio will see approximately 50 basis points charge-off in a good economy and up to 300 basis points in a recession.


Here are two reasons VSI Insurance is worth exploring, no matter the state of the economy:

Risk Mitigation: VSI Insurance reduces the impact on their bottom line, period.

Larger Client Pool: By securing VSI Insurance, lenders can enhance the protection of their loan portfolios allowing them to extend credit to a wider range of borrowers while still safeguarding their financial interests. 


We are only scratching the surface of VSI and are happy to answer any questions you may have.  Please do not hesitate to contact me using our Ask Us Anything resource here.

For more details about VSI, please read our complete guide to VSI Insurance here:




As the lending landscape continues to evolve, VSI Insurance remains a key component of a comprehensive risk management strategy. Lenders who continually seek to better safeguard their assets and optimize profitability should consider this option.

Published by Jim Gilpin May 21, 2024
Jim Gilpin