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Summary: Errors and omissions coverage for mortgagees—banks, building and loan associations, insurance companies, and other financial institutions—protects against impairment of the mortgagee’s own security through lack of physical damage insurance on the mortgaged property. Such a lack of insurance is usually the result of a mistake in the mortgagee’s office procedure. A policy might be misfiled, expire, and not be renewed. If a fire were to destroy the property and the mortgagor was unable to continue payments, the institution holding the mortgage would have nothing but ruins upon which to foreclose. Mortgageholder’s Errors and Omissions Coverage Form, CP 00 70 10 12, covers a bank or other mortgage servicing institution against both direct damage and legal liability losses that may arise out of error or accidental omission in its customary mortgage-handling procedures. It offers four coverage agreements: A and B deal with property coverage; C and D with liability coverage. The applicable causes of loss are set out in the form itself under the provisions for each individual coverage so that no separate causes of loss form needs to be attached. The ISO Commercial Lines Manual (CLM) specifies that the Commercial Property Conditions form, CP 00 90 07 88 is not to be used with form CP 00 70. Instead, the form itself includes a modified version of those conditions that apply in addition to the Common Policy Conditions form, IL 00 17 11 98.

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