Insurance Requirements

Insurance Requirements:

  • Life insurance on the life/lives, each in the amount of the loan (for a total amount of to be collaterally assigned to the lender. (Lender or lenders agent must be in possession of the original policyprior to closing)
  • Collateral assignment of Life insurance policy(s). You will have to contact your agent to obtain an assignment of benefits/proceeds form for the policy-this form must be completed and filed with home office of your insurance company in favor of the lender.

Life Insurance Instructions:

A complete copy of the life insurance policy(ies) on the life/lives of the borrower(s) at least in the amount of the loan, as defined in the conditional committment letter and SBA authorization and the loan agreement must be received by the lender, prior to closing. Decreasing term insurance is acceptable. Borrower may use existing life insurance to meet this requirement. Life insurance policies used as collateral for this loan may not be group policy(ies) or governmentploicy(ies). In addition, lender can not be named as beneficiary on the policy(ies). You will have to contact your agent or insurance company and obtain an assignment of life insurance policy as collateral form for the policy(ies) which is approved by your insurance company. Please execute the form, have your signature notarized, if required, and return to your agent who will forward the document to the home office of your insurance company. This form must be filed/recorded with home office of your insurance company. The endorsement should list the lenders legal address.

Personal Property: Evidence of hazard insurance coverage on all collateral in the full replacement cost/maximum insurable property located at your address. Lender is to be named as mortgagee insured in first position.

Personal Property: Evidence of flood insurance coverage, if applicable, in the full replacement cost/maximum insurable value on real property located at buyers address.

Prior to closing, Lender requires evidence of hazard and liablity insurance on collateral property for the full value on all pledged assets. Fire and extended coverage insurance must contain a mortgagee clause for lender similiar in character to the “New York standard mortgage clause”. General liablity insurance in an amount satisfactory to lender (minimum amout of $1,000,00) is also required.

To the lender “Loss payee” on contents coverage, “mortgagee/loss payee” on building coverage and “additional insured” on general liablity.

  • The binder /certificate of insurance should contain the following information
  • The name and the adress of the insured.
  • The name and mailing address of the certificate holder (Lender)
  • Location(s) of the operation(s) of the insured
  • Description of property or equipment insured
  • Description of coverage, including: name of insurer, policy numbers, policy limits, deductibles,expiration date of policy and, any special conditions or extensions of coverage in affect. i.e., property certificates – loss payee, and mortgage endorsements, all risk or special form coverage liablity certificates – additional insured endorsement, occurence form coverage.
  • Should include written notice to the lender 30 days prior to cancellation or material change in policy wording.
  • All hazard insurance policies must contain the following clause”The interest of the lender and the SBA shall not be invalidated by any act or neglect of the mortgagor or owner of the insured proerty”
  • Authorized signature of the borrower’s insurance agent or carrier and date
  • General Liability: Evidence of liability insurance for the borrower in the minimum amount of $1,000,000. Lender is to be named as loss payee/additional insured.
  • Worker Compensation: Evidence of Worker’s Compensation insurance for the borrower as required by applicable Florida Statutes.

A closing cannot be scheduled until all items in this checklist have been received and deemed to be satisfactory by the lender. Please note that this checklist is an overview of the information required by the committment letter and does not constitute a final binding list of items which may be rquired by the lender prior to closing. All questions regarding the above documents/information should be addresses immediately to lender’s counsel to ensure a smooth and efficient closing.


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