The Importance of Understanding Property Insurance Coverage
B2R Finance Guest Post by Brad Bordelon, HomeStar Property Claims
Many real estate investors are unaware of additional rights and duties required of them under most insurance policies. The standard mortgage clause (also referred to as “mortgagee clause”) is included in most insurance policies and is generally considered a separate, independent contract between the mortgagee/lienholder and the insurer. The terms within the standard mortgage clause protect the mortgagee/lienholder’s interest in the property. In the event that a tenant or borrower claim is denied, the interest of the mortgagee/lienholder can still be protected and coverage afforded.
For example, if an investor owns a property occupied by a tenant or borrower and that tenant or borrower fails to notify the investor or insurance carrier of an insurable loss to the property, the investor may still be able file a claim in order to recover insurable funds. In most cases, negligence or damaging acts by a tenant or borrower do not invalidate a claim of the mortgagee/lienholder due to the protections granted in the standard mortgage clause.
Of course, every insurance policy is different. The wide variance in protections provided under each policy draws attention to the importance of an investor’s responsibility to not only review, but to fully-understand the rights and responsibilities outlined by policies in place for each property. It’s best to seek professional help from an expert regarding any questions or concerns with an insurance policy. A less expensive alternative to having a lawyer review your policy is to seek advice from a third-party company with experience in hazard claims.
Brad Bordelon is Senior Vice President of HomeStar Property Claims, an industry-expert in filing hazard insurance claims. HomeStar Property Claims provides full-service claims analysis, loss inspections, claims filing, recovery services and property repairs. For more information on hazard insurance claims or to schedule a consultation, contact Brad.Bordelon@hspsusa.com, phone at (763) 200-3966 or connect online at www.hspsusa.com.
The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.