Condemnation Insurance (eminent domain):
Financial loss caused by eminent domain.
- Occurrence causes permanent loss of rent payments from tenant.
- Occurrence has rendered the property unsuitable for continued business operation (subject to restrictive covenants in the lease).
- Policy limits are no more than the present value (PV) of outstanding debt.
- Term coincides with primary term of lease, typically 10-20 years.
Paid for by the borrower for benefit of the lender.
- In case of condemnation, the condemnation award is first applied to offset the claim.
- Value of remaining property, including land, becomes available to offset any remaining amounts paid by insurer.