The passage of the Appropriations Act was an important measure in preserving such stability, for a time at least. (Photo: Diego M. Radzinschi/ALM) (Photo: Diego M.Radzinschi/ALM)

In the event that a commercial mortgage loan ends up in default,the lender must be able to realize on the collateral upon theexercise of remedies. If the collateral is destroyed or severelydamaged by, for example, a flood or an act of terrorism, the valueof the underlying asset will be greatly diminished or, in somecases, fundamentally eradicated (save for the value of the land).Insurance plays a crucial role in protecting the lender from such aloss.

Federal programs in the U.S. have made insurance more readilyaccessible to protect real property in the circumstances mentionedabove, specifically, the Terrorism Risk Insurance Program (TRIP) and theNational Flood Insurance Program (NFIP).

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