In a default or foreclosure situation, a lender may not want to take title to the encumbered property because of the exposure to potentially devastating environmental liabilities – asbestos, lead-paint, mold, chemical releases to the air, soil or groundwater are just a few.
A Commercial Lender Premises Policy from Great American Environmental provides protections against environmental liabilities arising from the encumbered property. Coverage is custom-tailored to protect lenders against losses such as repayment of the principal loan balance, bodily injury, property damage, business interruption, diminution in value and remediation of the collateral.
A Commercial Lender Environmental Policy was purchased by a lender upon closing of loan for a mid-size retail strip mall. Following default by the borrower, the lender/insured began the process of selling the complex. During that process, a phase I environmental assessment was performed which indicated that dry cleaning constituents may be present due to a historic dry cleaner at the property and called for a phase II. The phase II showed a PCE plume under the former dry cleaner. The lender/insured reported the condition and was entitled to the loan balance as it was less than the estimated clean-up costs.
A lender who provided a loan for a hotel had purchased a Commercial Lender Environmental Policy. While the initial environmental reports did not show any concern, after foreclosure a claim was made from a neighbor alleging that a plume of TCE from the subject property had migrated onto her property. Additional investigation showed that a former dry cleaner had existed on the subject property. The lender provided notice of this condition and requested that clean-up costs be paid.
A lender who provided a loan for an apartment complex had purchased a Commercial Lender Environmental Policy. After foreclosure, it was discovered that the hydraulic elevators had been neglected and leaked, resulting in the release of PCBs. Due to the nature of the release, clean-up was limited and elevated levels of PCBs were allowed to remain in place following remediation. As a result, a diminution in value claim was made by the lender based on the now contaminated site being worth less.
Download the Commercial Lenders Claims Scenarios