Lender Liability

Lender Liability extends coverage to the financial institution for losses relating to extensions of credit, agreements or refusals to extend credit, loan servicing, or the collection or restructuring of any extension of credit. Insured Persons are automatically covered under the D&O Policy.

Standard Sample Endorsement
Broad Form Sample Endorsement
Coverage Summary

Claims Examples: Standard or Broad Form
  • A bank makes a construction loan to a customer. The proceeds of the loan are issued to a contractor, but the contractor does not pay a subcontractor. The subcontractor sues the bank. This claim would be covered under either the Broad Form Lender Liability or the Standard Form Lender Liability.
  • A class action alleging TILA violations is filed after the bank erroneously sends borrowers the incorrect Notice of Right-to-Cancel forms. This claim would be covered under either the Broad Form Lender Liability or the Standard Form Lender Liability.
Claims Examples: Broad Form only
  • A bank is sued by another bank that alleges that the bank is wrongfully asserting that it has a superior lien on property on which the plaintiff bank is foreclosing. This claim would be covered under the Broad Form Lender Liability, but not under the Standard Form Lender Liability.
  • A community bank represents to a foreign bank that it is willing to participate in a local loan transaction. The local institution then sells off its participation and is subsequently sued by the loan originator when the borrower defaults. This claim would be covered under the Broad Form Lender Liability, but not under the Standard Form Lender Liability.
Features
  • Coverage is available as part of the Broad Form Company Liability endorsement or as an endorsement to the D&O Policy.
  • Available in Broad Form or Standard Form
    • Standard Form Lender Liability covers suits brought by borrowers and guarantors, as well as first party loan servicing, appraisal and title services.
    • Broad Form Lender Liability covers suits brought by borrowers, guarantors and other third parties, as well as first and third party loan servicing, appraisal and title services.
 

Notwithstanding any language to the contrary, nothing contained herein constitutes nor is intended to constitute an offer, inducement, promise, or contract of any kind. All coverage descriptions and claims examples are provided for informational and educational purposes only and are not a representation as to coverage for any particular claim and are not represented to be error free. Coverage for any claim is determined upon the specific facts of the claim, the terms and conditions of the policy and applicable law. For details on the coverage provided by your specific contract of insurance, please refer to your policy. Coverage is subject to underwriting guidelines and may not be available in all states. Limits may be capped for underwriting reasons. Any links to any sites which are not originated by ABA Insurance Services Inc. (ABAIS) are provided only as a courtesy and are not intended to nor do they constitute an endorsement by ABAIS of the linked materials.