If a borrower defaults and the collateral property inforeclosure is found to have a pollution condition, the policy provides Mortgage Protection coverage. Under this coverage, the insurer will pay the outstanding loan balance, less a 10% coinsurance, provided that foreclosure proceedings have commenced and the pollution condition is reported during the policy period. This protection allows the lender to recover the unpaid loan amount even if the property’s value is diminished or the property becomes unsellable due to environmental contamination.

The policy is designed to indemnify the lender for the remaining loan balance, nomatter the cost of remediation to the property. The policy also includes Third-Party Liability Coverage for off-site cleanup costs, bodily injury, and property damage caused by pollution migrating from the covered location. If regulators or third parties file a claim against the lender for theseoff-site impacts, the policy will cover cleanup costs, legal defense, and damages as long as the pollution condition wasn’t caused by the lender’s ownactions. This ensures that lenders are financially protected from the ripple effects of environmental contamination beyond the property itself.

Yes, coverage can be issued at closing for new loans or added to refinancing transactions.

If the bank acquires the property through foreclosure andlater discovers previously unknown contamination, the policy still applies. Mortgage Protection coverage continues during the period the bank owns the property, as long as the pollution condition was not known beforehand and is reported within the policy period. This gives lenders peace of mind that even post-foreclosure discoveries won’t result in unexpected losses.

Most commercial real estate loans are eligible. Certain high-hazard property types(e.g., heavy industrial, gas stations, dry cleaners) may require additional underwriting and could qualify for coverage under another program.

Policies are available for loans up to $10,000,000. Loans over that amount would require additional underwriting and could qualify for coverage under another program.

Coverage is effective as of the loan closing date, aligning with the lender’s risk beginning.

Basic loan details such as loan amount, term, loan type, collateral property address, property use, and loan-to-value ratio.

A premium indication can often be generated instantly through the rating tool, with binding available once underwriting review is complete (typically within 72hours).

No, it’s an optional risk management tool. However, some lenders may adopt it as a standard requirement for specific loan programs.

If environmental contamination leads to borrower default and foreclosure, thelender submits a claim. The insurer pays the lender the outstanding loan balance. There is a 10% coinsurance that would be deducted from the loan balance.

Yes. The insurance is designed to help lenders satisfy banking compliance requirements, including those related to environmental liability under CERCLA (the Comprehensive Environmental Response, Compensation,and Liability Act). By transferring residual environmental risk to the insurer, the policy ensures that lenders are protected against potential cleanup obligations or loan losses if contamination is later discovered. As part of underwriting, a desktop environmental risk reviewis performed. This review provides the majority of the insights a Phase I ESAwould typically deliver, enabling the insurer to underwrite the coverage while also fulfilling the bank’s due diligence obligations. In this way, lenders gainboth regulatory compliance and enhanced protection, without the delays or costsoften associated with full Phase I assessments

Each policy includes a desktop study of the environmental risk that will beperformed by a third-party. A copy of this will be issued to you with thepolicy that is bound. Some borrowers may want to have a Phase I ESA performed for their own benefit. This may especially be true if environmental issues arefound during the desktop study.

The lender pays the insurance company directly but the actual cost of the policy is typically passed through to the borrower as a loan closing expense.

Premiums are based on loan amount, loan term, property type/use, and some additional factors used in loan underwriting. Minimum premiums start at $700.

The premium is a one-time charge at policy inception, covering the full loan term.

Policies terminate when the loan is repaid

This policy is distinct so it does not overlap with borrower’s insurance (e.g.,Contractor’s Pollution Liability, Site Pollution Liability). It exists solely to protect the lender’s financial interest in the loan.