Insurance for OwnersChanging Lender Requirements

Presented by Holly McCormick ofJames G. Parker Insurance Associates, Inc.

September 16, 2014

I. Carrier rating criteria

A. CMBS (if Lender will be using Standard & Poors as the rating agency):1. Loans under $20MM = A- by S&P or A- X by AM Best’s or A3

by Moodys2. Loans over $20MM = A- by S&P3. Multi-layered programs for loans over $20MM

a) 4 or fewer carriers = 75% must be A- rated by S&P with the balance no lower than BBB

b) 5 or more carriers = 60% must be A- rated by S&P with the balance no lower than BBB

I. Carrier rating criteria

B. Fannie Mae = A- VI by AM Best’s C. Freddie Mac = A- by S&P or A- by Fitch or A 3 by

Moodys or the applicable AM Best’s rating below:1. Loans under $5MM = A- VII by AM Best’s2. Loans over $5MM but under $25MM = A- VIII by AM Best’s3. Loans over $25MM = A- VIX by AM Best’s

D. Portfolio Lenders = Typically A- VIII by AM Best’s, but will vary by lender.

II. Blanket Policies and Loss LimitsIII. Flood

A. FEMA is remapping everything since Katrina/Rita/Wilma, Irene & Sandy

B. NFIP now provides up to $500,000 per building for commercial and habitational properties

C. Deductibles collectively cannot exceed $100,000 per occurrence

D. Surveyor prepared Elevation CertificatesE. Letters of Map Amendment – when should you apply

IV. Named Windstorm - Tier I CountiesA. The entire state of Florida is a single Tier 1 CountyB. Anything else within 25 miles of a coastline in high

wind areas

V. Terrorism Caps = if TRIA/TRIPRA is not renewed 12/31/14

A. FEMA 200% of the then premiums for all other coverages required

VI. General Liability – Capped Aggregate Programs

A. Think $1,000,000 per covered location on average

VII. ZoningA. Legal non-conforming structures = Ordinance & law

coverageB. Legal non-conforming uses when the loan amount

excess the replacement cost value = zoning protection coverage