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vendors single interest coverage (VSI)

Vendors single interest coverage is insurance purchased by financial institutions that protects against financial loss from physical damage to property (collateral) on which loans have been made.

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Such coverage applies in the event the borrower does not have physical damage coverage in place. Vendors single interest insurance covers only the outstanding balance on the loan. Even though the borrower frequently pays the premium, they receive no insurance protection of their equity under such policies.