Financial institutions who are offering loans to individuals or corporations will want to ensure that the security property is adequately protected in the event that an accident results in damage to or destruction of the property. Insisting that a proper insurance program is in place will allow the lender a reasonable degree of assurance that the borrower will still be able to meet the obligations of the loan agreement, even if there is significant damage or loss to the property.
Proincon Risk Analysts can assist lenders with
insurance related issues in the following areas:
- In the drafting of standard insurance requirements that will form part of the loan agreement.
- Advise the lender what other insurance coverages may be needed for borrowers that are faced with insurance exposures that are out of the ordinary.
- Assist the lender in negotiations where the borrower may ask for special consideration to modify standard insurance requirements while the loan agreement is still to be drafted.
- Perform detailed reviews of insurance documentation submitted on the borrower’s behalf and follow-up with the borrower or his representative to ensure that the insurance is satisfactory to the lender.
- Provide services to track the insurance to ensure that the renewal policy documents continue to meet the lender’s requirements for the entire term of the loan.
Many contracts have clauses that transfer responsibilities and potential liabilities to you. These clauses are usually buried in the verbiage of the contract and ignoring them when negotiating the draft of your contract may result in you assuming some unforeseen liabilities that may not be covered by your insurance program. This may serious impair your financial stability.
