All Risk Insurance is an insurance policy that has been a tool for businesses for many years. Coverages are grouped together to mitigate many of the usual business risks that are prevalent today. Most companies utilize some part of All Risk Insurance, but our group has added a new rider that helps mitigate the lenders risk by guaranteeing principle and interest (P&I) payments (including bankruptcy).

The Principle & Interest rider starts with the lender’s term sheet and customizes the policy to cover risks according to total capital needs, capital disbursements and escrows required. The policy stays in effect from construction through the loan period.

The All Risk policy starts with a reserve account with six months of principle & interest payments (additional capital from the lender) held by the lender and is activated if there is not sufficient capital to make a loan payment. Once the money is taken from the reserve account, the insurance company is notified. If the reserve account is depleted to half, or three months of payments, the insurance company must bring the reserve account back to six months of payments. If the loss is considered catastrophic, the insurance company must pay the lender the remaining principle on the loan and any accrued interest, even in the case of bankruptcy. 

This policy guarantees there will never be a late or missed payment.

The cost of this insurance is determined during underwriting and has been shown to be very competitive.