All You Need To Know About VSI Auto Insurance
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A Vehicle Single Interest (VSI) auto insurance policy protects the creditor of a vehicle that is being financed from a theft or collision loss. It offers basic liability coverage, which paid through the loan origination fees during the purchase of the vehicle or as monthly installments that make up a part of the loan payment. Although VSI insurance is commonly associated with boats and motorcycles, it is also applicable to any watercraft or wheeled vehicle that is being financed.

There are two types of VSI Insurance:

  1. Tangible property
  2. Default or credit loss

Tangible Property Coverage

This type of coverage includes the interest of the lender in the tangible property. For example, if you purchased a motorcycle for $12,000 and obtained a loan for $6,000, the insurance will cover only up to $6,000 of the value if the vehicle gets damaged. Also, only the lender is allowed to submit the claim for the loss to the insurance company, and the buyer won’t get anything under the tangible property clause.

Default or Credit Loss

This type of coverage confirms that the buyer pays his or her full share of the vehicle loan without defaulting. In case the buyer is unable to pay the loan and his or her vehicle is repossessed, the buyer can claim for compensation his portion of the loan from the insurance company. What he will get is the value of the vehicle at the time of repossession minus the amount paid by the mortgagor. This type of insurance is also called blanket coverage.

The VSI insurance program is known to provide coverage for the already existing loans and those about to be processed. Here are some key features of VSI auto insurance coverage:

  • The premium a lender has to pay will be decided on the portfolio of the outstanding balance or loans that are granted every month
  • Lenders can negotiate with the VSI auto insurance provider for low deductibles and may also be allowed to offer other types of collateral. They can also get the time span for the loan cover to be extended.
  • Lenders with VSI insurance have to disclose the information to the buyer before selling it. The cost of the insurance can’t be incorporated into the loan amount the buyer will be getting financed for the vehicle.

Coverage Limitations

VSI insurance is just one way of protecting a vehicle. Buyers should also purchase additional coverage because VSI insurance covers only the lender’s portion of the vehicle and not the entire vehicle. Also, there are chances of premium rates being increased with every claim made by the lender and this might become unaffordable for the buyer. In case the insurance is cancelled, the buyer will also find it difficult to get replacement coverage because other insurance companies will also assess them as ‘high risk’.

Buying VSI Auto Insurance

Buying insurance may appear simple, but the insurance industry itself is complex. Every insurance agency will have different clauses and rules of work. So how will you go ahead with having your vehicle VSI insured?

Shortlisting an insurance company just by finding its quotes to be the cheapest is an old method that no longer works. There are so many companies in the insurance sector and competition is fierce. Just going by the price doesn’t guarantee that you will be satisfied with the coverage and services offered. Most of the insurance companies have their own websites, so check them out to learn more about the insurance benefits they offer. Also, look for consumers’ feedback to learn if the insurance company offers prompt customer support or not.

Word of mouth is a great way of finding a reliable service/product provider, specifically in the insurance sector. Talk to friends and family to see if they know an insurance professional who can help you out in getting VSI auto insurance. Also, ask for feedback about the insurance company to find out whom they trust.

Talk to at least three to four insurance companies before shortlisting one. It is always great if you can negotiate on the price or make certain amendments in the cover according to your requirements.

Conclusion

VSI auto insurance has lots of benefits associated with it provided you buy it from the right insurance company. Do research about the insurance and the company you want to purchase it from to ensure a hassle free experience.


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