Financial Institutions taking over construction projects due to foreclosure has been a topic of concern to Financial Guaranty Insurance Brokers since the financial crisis. Due to the present Financial Institution Policies excluding such exposure, we would like to recommend the following prior to taking over a construction project:
- Have a copy of the insurance policy through the General Contractor or Owner with your files.
- Request the General Contractor/Owner to list the Financial Institution as an Additional Insured/Loss Payee on the policy.
If the Financial Institution will continue the project on their own, we recommend the following:
- Request the present carrier on the project to add the Financial Institution as the Named Insured (Owner) of the policy.
It is very important that the Financial Institution is proactive in having the policies (Owner Controlled Insurance Program or Wrap) due to the deductible that is on these policies. Coverage will not be triggered until the deductible is met by the owner of the policy (Named Insured). It is also important to have this policy for the future because the policy may have coverage that lasts up to 10 years after the project completion.
We at Financial Guaranty Insurance Brokers will assist you in completing these items.