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?