Good question! And it’s one I’ve heard many times during training sessions and demonstrations of the Deal Pack software to folks like you, in the BHPH industry. As a BHPH dealer, you not only sell the vehicles, you finance the deals; you are the bank, not just a car salesman. VSI stands for Vendor’s Single Interest insurance, and it protects the lender (you!) under multiple circumstances:

Damage to the vehicle sustained when the borrower did not have the required insurance coverage, including total loss
Losses due to the lender being unable to repossess the vehicle (unable to locate the vehicle, or if it was confiscated by the authorities)
Losses due to theft or damage to the vehicle after it was repossessed

One of the primary benefits to the lender is that, in most states, the cost of VSI insurance can typically be passed along to your customers as part of the loan origination fees, and can keep your losses to a minimum by reducing net charge-offs. Under many circumstances, VSI insurance can be waived if the borrower has secured their own insurance and properly names you as the lien holder. Under VSI, only the lender can make a claim and receive compensation if the vehicle is damaged, totaled or if the borrower defaults. It’s important for the borrower to understand this coverage does not protect them directly in any way.