Vendor Single Interest/Lender Single Interest (VSI/LSI)
Often called blanket single interest coverage, VSI/LSI protects lenders from financial losses due to uninsured physical damage to the loan collateral. With this product, the lender purchases coverage for all loans secured by property as collateral, and the lender pays the insurer a flat premium rate per loan. For the benefits to be payable, the loan must be in default, the property must be repossessed, and the creditor must have suffered an impairment of interest. The VSI/LSI policy covers the difference between the value of the property at repossession, and the loan balance at the time of repossession.