Lender’s Single Interest Insurance Policies

Lender’s single interest insurance protects the bank from loss or damage to personal property that is the collateral for loans — cars, trucks, boats, RVs, snowmobiles, and other personal property. Coverage is provided for the bank’s interest and not that of the borrower.

Be careful of the potential coverage overlap of lender’s single interest with the mortgage impairment insurance on mobile homes.

Coverage is usually included for repossessed property. Policies can include protection for title errors and omissions as well.

Most lender single interest policies are paid on a monthly reporting basis. The bank reports the value of secured loans, and a premium is charged for the exposure.

Coverage can include repossession expense reimbursement, mechanic’s lien reimbursement, gap/deficiency coverage, borrower deductible coverage, and vehicle location/skip reimbursement.

Lender’s single interest is usually sold by specialty insurers. Bank trade associations often have access to special programs.