Insurance: Insurance

H. Other Forms of Insurance Not Necessarily Found in Real Estate Transactions

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H. Other Forms of Insurance Not Necessarily Found in Real Estate Transactions. In the case of a manufacturing business, it is important to reconcile the insurance requirements in a loan that is not secured by real estate with the standards in the industry for insuring equipment, manufacturing processes, software, computer operations, and other essential items that are required for the operation of a business. This insurance is in addition to boiler and machinery insurance and is frequently a specialty item. When representing the lender, one should make due inquiry of the nature of the insurance and have the lender's risk managers advise as to what form of policies are appropriate for this industry in which the loan is being made.

An important thing to remember about insurance is that in the right market, almost any kind of insurance can be written or tailored. If you are engaged in a transaction where real estate is not the foundation, it is important to sit with the lender and the lender's risk manager in order to determine whether or not there are any risks inherent in the business that are not typically covered by insurance. It is entirely possible for insurance carriers to write special lines and special forms of policies that will cover a-typical businesses and make sure that there are proceeds of insurance available to repair or replace significant items of machinery and equipment as well as inventory that may not be readily replaceable. Of course, this insurance goes hand and glove with the business interruption insurance discussed later in this article.

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