Due Diligence and Review

Due Diligence and Review

Protect Your Loan Exposure – Ensure Borrower Insurance Coverage is Sufficient

Lending institutions each day approve loans to businesses following exhaustive review of applicant credit-worthiness and ability to repay the loans yet continually make one fatal flaw.

They rely on a Certificate of Insurance to satisfy their requirements that borrowers secure and maintain sufficient insurance.

A Certificate of Insurance will never reveal all the exclusions, limitations and endorsements that might leave a borrower without coverage and the means to remain a going concern following an incident, accident or disaster…and which can leave a lender exposed.

Things often overlooked…
  • Does the policy cover changes in building code?
  • Are deductibles reasonable and leave a business enough to remain in operation following a claim?
  • Is coverage diminished following a claim?
  • Does the policy provide business interruption coverage that includes extra expenses and rental plus “Extended Period of Indemnity”?
  • Are litigation defense costs in addition to or included within, which reduces the coverage limits?
  • Is professional liability necessary and covered?
  • Is damage due to windstorm and hail not included even though these occurrences may shut down a business?
  • Is Flood coverage shown in one section of the policy only to be removed by endorsement later?
  • Is the lending institution properly listed and given proper notice of cancellation?
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