An insurance professional will tell you that the words all risk, blanket, broad form property damage and comprehensive general liability are obsolete. The Special Causes of Loss form essentially makes a Commercial Property insurance policy all risk. However, earthquake and flood insurance are always excluded perils and must be added by endorsement.
Borrowers, insurance agents and brokers are reluctant to modify insurance certificates. However, it is common practice for insurance companies to grant them permission to do so. On the other hand, insurance underwriters won't endorse their policies with wording that lenders provide them. Arguably they are right on this point, because we think the contemporary coverage forms mentioned above provide adequate protection to lenders and mortgagees.
Certificates of Insurance
The certificates of insurance hyperlinked below are the copyrights of Acord.org, an organization subscribed to and supported by insurance companies and insurance brokers. Montclair Risk Advisors, Inc. is a subscriber to Acord.org and therefore has permission to publish these forms on this Web site.
Insurance companies that directly provide insurance to their insureds, most notably the Liberty Mutual Insurance Companies, issue their own certificates of insurance. Brokers who place insurance with Lloyds of London usually issue Cover Notes in lieu of Acord certificates. Otherwise, the two Acord forms listed below are the principal means by which borrowers can comply with lenders' insurance requirements.
Insurance Certificates
- Acord Form 25 is the Certificate of Liability Insurance. This form can provide evidence of commercial general liability insurance as well as other forms of liability insurance, including workers compensation insurance.
- Acord Form 28 is the Evidence of Commercial Property Insurance. This form is very detailed and widely accepted by lenders because it treats valuation, coinsurance and other coverage issues of concern to secured lenders.
Borrowers, enage the services of an insurance professional to facilitate the process of meeting lenders' insurance requirements. Your insurance broker/consultant should review the credit agreement and initiate action to bring your insurance policies into conformance with the credit agreement. They can also rebut requests for modifications of certificates or policy wording that are unreasonable. A good broker will assure completeness and accuracy of certificates and timely submission of them to the closing attorneys.
Our standard at Montclair Risk Advisors is to obtain and review complete copies of every insurance policy. We do this whether we represent the interests borrowers or lenders. As is printed at the top of these Acord forms, these certificates are "issued as a matter of information only..." For more information about our Insurance Coverage Review and M&A Due Diligence Review services, visit our Services Menu.
