Your Borrower’s Had a Construction Accident … Where does this leave your bank? Help may be found in borrower’s insurance policies
Construction accidents can cause major disruptions and delays, and may result in the need to refinance a project. Banks may incur sizeable losses in connection with such refinancings, including fees paid to attorneys and other professionals, and reduced or forgiven interest payments. Such losses are typically absorbed by the banks—but they might be recoverable under builders’ risk insurance that is issued for the project.