Real Estate Finance: Evaluating Property Insurance Under Current Lender Standards

Determining Replacement Cost, Business Interruption, Flood, Windstorm, Earthquake, Ordinance and Law, and Terrorism Coverage

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, January 11, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will provide real estate counsel with an understanding of the various components of property insurance and the current requirements of lenders with regard to each type of coverage. The panel discussion will include replacement cost, business interruption, ordinance and law, flood, windstorm, earthquake and terrorism coverage, when each coverage is required, and how coverage amounts are determined.

Description

Evaluation of property insurance has become a complex undertaking in commercial real estate finance. It is often the final item to be resolved in a transaction, in part because insurance companies frequently need information taken from other third-party reports before insurance policies can be finalized.

Real estate counsel must have an understanding of when various insurance policy coverages are required and how they are impacted by the appraisal, title, survey, zoning report and engineering report. Loan document provisions may need to be revised to reflect deal-specific insurance requirements.

Listen as our authoritative panel, consisting of an insurance consultant and closing counsel, discusses replacement cost, ordinance and law, flood, windstorm, earthquake, business interruption and terrorism insurance, and how coverage amounts are determined. They will also discuss how certain coverages are tied to information taken from survey, zoning and other third-party due diligence, how insurance requirements are addressed in the loan documents, and insurance company ratings required by CMBS and other institutional lenders.

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Outline

  1. Discussion of standard and optional coverages included in property insurance policies
    1. Replacement cost
    2. Business interruption
    3. Ordinance and law
    4. Terrorism
    5. Flood
    6. Windstorm
    7. Earthquake
    8. Boiler and machinery
  2. How third-party due diligence affects the foregoing coverage
    1. Appraisal—breakdown of property value and income calculations
    2. Survey—flood zones, zoning designation and related information
    3. Title—appurtenant easements and other issues
    4. Zoning—conforming vs. legal non-conforming
    5. Engineering report—earthquake zones
  3. Drafting tips with regard to deal-specific insurance provisions
  4. Insurance carrier ratings—lender requirements

Benefits

The panel will review these and other key issues:

  • What types of coverage are currently required in real estate finance transactions?
  • What information is needed from appraisal, survey, title, zoning, and engineering reports to finalize coverage?
  • How are coverage parameters determined?
  • What are the current rating requirements for insurance carriers, and what do the parties do when the existing carrier is not approved?
  • How are insurance requirements (and deviations therefrom) reflected in the loan documents?

Faculty

Bordy, Michael
Michael J. Bordy

Principal
Michael J. Bordy, A.P.L.C.

Mr. Bordy is a transactional attorney who has 26 years of experience handling a variety of issues in business,...  |  Read More

Alexandra Hayden, Esq.
Alexandra Hayden, Esq.

Transaction Counsel
Harbor Group Consulting

Ms. Hayden serves as Transaction Counsel, conducting insurance risk analysis on transactions ranging in size from...  |  Read More

Katherina Komisarjevsky
Katherina Komisarjevsky

Chief Operating Officer
Harbor Group Consulting

Mrs. Komisarjevsky is responsible for the management oversight of the firm’s large loan transactions, including...  |  Read More

Kevin D. Smith, CPCU, ARM
Kevin D. Smith, CPCU, ARM

Vice President
The Graham Company

Mr. Smith is the leader of his firm's Real Estate Division and the International Division. He also manages the...  |  Read More

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