Commercial real estate distress has been on the rise as more property owners struggle to stay current with their loans. But the rising cost of insurance is adding a new threat for small landlords: having coverage forced on them by their lenders.
Insurance brokers and lenders expect to see more borrowers be subject to force-placed insurance — also known as collateral-protection, creditor-placed or lender-placed insurance — which is used by lenders to safeguard their investment when a borrower’s coverage lapses or doesn’t meet their requirements.