This coverage provides payment to the lender for the unamortized balance of the loan should a tenant terminate the lease due to damage to the building of varying degrees.
Highlights of the policy:
- Covers the entire term of the loan up to 30 years
- Benefits the lender only (not the tenant)
- Provides the lender the entire unamortized balance of the loan within 15 days of a casualty claim being submitted
- The insurer then takes the lender’s position as first mortgagee and all rights of recovery associated with that position
- Premium is paid up-front
- Policy is non-cancelable once premium is paid
- Can be quoted for varying terms, e.g. some leases permit termination if damage occurs that cannot be repaired within 90 days, others permit termination if only 50% of the building is destroyed
- When the policy pays the lender the unamortized balance of the loan, the insurer takes over the lender’s first mortgage position on the property (much like Condemnation Insurance)
Contact us today so we can help you find the policy that’s right for you.