Introduction to Lender Asset Protection Insurance

I use “lender asset protection insurance” to describe those insurance policies that protect a lender’s interest in the property that it holds as collateral for loans.

Here are the policies included in lender asset protection insurance:

Mortgage Errors and Omissions Insurance – Protects the bank from errors made in the management of the collateral or government guarantees that support a mortgage.

Forced-Placed/Foreclosed Property Insurance – Property insurance covering either properties the bank owns or properties the bank has a mortgage interest in when the owner has failed to buy insurance.

Forced-Placed/Foreclosed Flood Insurance – Property insurance covering flood either at properties the bank owns or properties the bank has a mortgage interest in when the owner has failed to buy insurance.

Real Estate Owned Liability Insurance – Bodily injury and property damage liability insurance protecting the bank from lawsuit by a third party.

Lenders’ Single Interest Insurance – Coverage on the lender’s interest in cars, boats, trucks, motorcycles, and other chattel held as security in a loan.

These policies are often provided by specialty lines insurers and insurance agents who specialize in this area of coverage.

Banks often have the loan department manage lender protection insurance policies instead of the chief risk officer or chief financial officer.

I urge you to have a single agent for your bank’s entire lender asset protection insurance. The coverages are complex and need to be made to work together. A specialist in these coverages is important to proper functioning. Two agents I have found to be exceptional are The Miniter Group (www.Miniter.com) and the firm Lee and Mason (www.LeeAndMason.com).