Single Interest Insurance is an Insurance policy for lenders or lessors to protect their security interest in stated property (e.g. cars and homes) in the event of customer default. These polciies are also known by the more common term: Force Placed Insurance.
Financing companies sometimes require single interest insurance for subprime borrowers – people with marginal credit. In most states lenders are permitted to pass on the policy cost to the borrower/customer.
As the name implies, it is SINGLE interest and I’ll let you guess whose interest is protected and whose is not.
However, just because it’s single interest does NOT mean it is less expensive than a customer purchases policy that provides more protections. To the contrary, Single Interest Insurance tends to be significantly more costly while providing significantly less coverage. Adding insult to injury, most of these Single Interest Policies are sold by companies that have affiliated business agreements with the lender purchasing the policy.