A specialty approach to protecting against collateral property liability
The consequences of environmental liabilities from a potentially impaired site are far-reaching. Both property buyers and lending institutions face risk, but especially so, the bank lender.
With increased environmental awareness and more and more stringent environmental regulations, the risk to lender institutions grows. If a buyer defaults, the loan could become the bank's responsibility, and lender losses from unknown and unexpected environmental issues are actually greater than those from fire, theft, vandalism, or title risks.
Secured Creditor (or Lenders Liability) coverage provides protection to a lender in several circumstances. It provides protection in the event of a borrower default. It also protects lenders from financial loss in cases where environmental conditions are found and remediation must be paid either by the outstanding loan balance when a default occurs or the cost of the environmental cleanup, usually whichever is less.
With terms running up to 15 years, the policies also provide coverage for:
- Bodily Injury and Property Damage
- Business Interruption
- Legal Defense
Lender’s Liability coverage is tailored to protect the property portfolio performance of lending banks against the financial fall-out of a buyer defaulting on a loan, leaving an expensive environmental problem behind.