What your lender requires the insurance to say
The same list appears in essentially every Canadian commercial mortgage funding condition, which is exactly why nobody publishes it — and why borrowers find out three days before close that the certificate is wrong.
01The answer
Which omissions actually stop a funding?
6 of the 10 items below stop funding rather than merely delaying it. The rest cost you a day. Knowing which is which is the difference between a phone call and a missed closing date.
02The checklist
Every requirement, with the wording that satisfies it
- 01
All-risk property coverage on the building
Stops fundingNamed-perils wording leaves the lender's security exposed to anything the policy forgot to list.
"All risks of direct physical loss or damage" on the building, not "named perils" or "broad form".
- 02
Replacement cost basis, not actual cash value
Stops fundingActual cash value depreciates the building. A 40-year-old roof settles at a fraction of what it costs to replace, and the lender's collateral is short by the difference.
"Replacement cost, no deduction for depreciation" with a stated-amount or waived coinsurance endorsement.
- 03
Limit at or above 90% of insurable replacement cost
Stops fundingBelow the coinsurance requirement, every partial loss settles short — the lender's security erodes on losses that were never total.
Building limit shown on the certificate, tested against a current replacement cost estimate.
- 04
Business interruption or rental income coverage
Stops fundingDebt service does not stop while the building is rebuilt. This is the coverage that pays the mortgage during the outage.
"Rental income" or "gross earnings" with a stated period of indemnity, normally 12 to 24 months, and an extended period of indemnity endorsement.
- 05
Lender named as first loss payee and mortgagee
Stops fundingWithout it the loss cheque goes to the borrower, not to the security.
Exact registered lender name and address under "Loss Payee" and "Mortgagee", with a standard mortgage clause (IBC 3000 in Canada).
- 06
Commercial general liability, lender as additional insured
Third-party claims reach the owner of record, which after default is the lender.
$5,000,000 per occurrence is the common commercial minimum; $2,000,000 appears on smaller single-tenant deals.
- 07
Flood and earthquake where the location is exposed
A lender that has mapped the hazard will name it specifically, and a sub-limit far below the exposure reads as no coverage at all.
Named sub-limit and the percentage deductible, both stated. A deductible expressed as a percentage of values is not the same as a dollar deductible.
- 08
Waiver of subrogation in the lender's favour
Stops the insurer recovering from a party the loan documents already protect.
"Waiver of subrogation in favour of [lender]" endorsed onto the property and liability sections.
- 09
Notice of cancellation, 30 days
The lender needs warning before its security goes uninsured, not after.
"30 days' written notice of cancellation or material change to the mortgagee."
- 10
Binder before funding, certificate before or at close
Stops fundingThis is the item that actually delays closings. A binder is issued in days; the certificate with correct lender wording routinely takes longer.
Order the binder the day the commitment is signed, and send the lender's exact registered name to the broker in writing.
03Next
Produce the scope sheet
The estimator turns this checklist into a broker submission carrying your own values, your market's mapped perils and the wording above.
Open the estimatorQuestions
What insurance does a commercial lender require?
All-risk property coverage on a replacement cost basis, a limit at or above the coinsurance requirement, business interruption or rental income, liability, and the lender named under the standard mortgage clause. Mapped perils such as flood or earthquake are named separately where the property sits in an exposed zone.
What is the difference between a loss payee and a mortgagee?
A loss payee is paid at the insurer's discretion and loses its claim if the insured breaches the policy. A mortgagee under the standard mortgage clause holds an independent right of recovery that survives the borrower's breach. Lenders require the latter; certificates frequently show the former.
Why did my funding get delayed over the certificate?
Almost always one of five things: actual cash value instead of replacement cost, a limit below 90% of replacement cost, no business interruption, a missing mapped-peril extension, or the lender shown as loss payee rather than mortgagee.
How early should the certificate be ordered?
Ten business days before funding. A certificate is issued in a day, but a correction to the underlying policy — adding an earthquake extension, moving from ACV to replacement cost — is an underwriting decision and takes a week.
Sources
- [1] IBC 3000 standard mortgage clause — The Canadian standard wording naming a mortgagee with an independent right of recovery.
- [2] Insurelor lender requirement review — Compiled from Canadian commercial mortgage funding conditions. Curated, dated and revised in the open.