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What is Blanket Hazard Insurance and Do I Need It?

Every day financial institutions make loans to people looking to purchase new homes and commercial properties. While larger institutions that issue Fannie, Freddie or GSE serviced loans tend to have sophisticated tracking mechanisms in place to identify the lack of insurance to secure the collateral, this is not always possible for the servicing industry as a whole.

If your operation is having difficulty tracking insurance and you do not currently service GSE loans, blanket insurance could be an ideal option.

What is blanket insurance?

Blanket insurance is written as a master policy that covers a bank’s interest in real property. In the event of a loss by an insured peril and the homeowner’s insurance was not maintained by the borrower, the policy will respond. The blanket policy (also known as Portfolio Guard by Proctor Financial) covers the entire real estate portfolio with an annual premium paid by the bank. This coverage will protect the bank’s interest in the uninsured collateral and eliminate individual property tracking. The blanket insurance provided by Proctor Financial covers various property types and insures against the perils of fire, windstorm and vandalism. Insurance coverage is also provided on an all risk basis offering broad coverage except for the standard exclusions.

What kind of institutions should purchase blanket insurance?

Typically, the ideal client for this type of product is a financial institution looking to reduce administrative expense associated with hazard insurance tracking. To keep its’ clients in compliance, PFI does not recommend blanket insurance for those financial institutions that service Fannie, Freddie or GSE loans. Blanket Hazard insurance also does not replace the requirement to track insurance for Flood compliance.

PFI offers two types of blanket hazard insurance: EquiShield and Portfolio Guard.

EquiShield blanket insurance covers home equity, HELOCS and consumer mortgages whereas the Portfolio Guard product provides insurance coverage for residential and commercial properties. Foreclosed properties are written on a separate policy and not afforded coverage under the Blanket Hazard Insurance Program (Portfolio Guard).

Which blanket insurance is right for us?

Talk to a PFI representative today to learn more about the different types of insurance programs designed to mitigate risk for financial institutions and servicers.