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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 the exercise of remedies. If the collateral is destroyed or severely damaged by, for example, a flood or an act of terrorism, the value of the underlying asset will be greatly diminished or, in some cases, fundamentally eradicated (save for the value of the land). Insurance plays a crucial role in protecting the lender from such a loss.

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