ACORD 27 vs ACORD 28: evidence of property insurance

The two forms carry the same identity block (agency, insurer, named insured, loan number, policy number, effective and expiration dates, property location) and the same cancellation box, which promises only that notice "will be delivered in accordance with the policy provisions." They differ in how much of the coverage they force the agent to spell out.

ACORD 27 gives the coverage section one open grid headed "coverage / perils / forms," "amount of insurance" and "deductible," plus a remarks box. The agent writes in whatever applies. Its additional interest box offers mortgagee, lender's loss payable, loss payee and additional insured.

ACORD 28 is titled for commercial property and turns the coverage section into a checklist. Each line is answered yes, no or not applicable, with a limit and deductible where it applies. It also asks the agent to complete a separate form for each insurer when a policy is split among companies, and it adds a line for permission to waive subrogation in favor of the mortgage holder before a loss. Its additional interest box offers mortgagee, lender's loss payable and contract of sale, with a field for the lender's servicing agent.

The edition hosted by the same New York City office is ACORD 27 (2016/03). It carries the identity block, a property location and description, the perils insured (basic, broad or special), and the open coverage grid with an amount and deductible per line. Everything the lender cares about beyond that, such as replacement cost, a flood sublimit, or a builder's risk form number, goes in the coverage grid or the remarks box in the agent's own words.

Lender documents reflect that flexibility. One bank's internal staff guide, Capital City Bank's builder's risk guide (found as a copy on a knowledge-base sandbox), says coverage details are listed in the "(ACORD) 27 or 28," and the Wisconsin Housing and Economic Development Authority lists ACORD 27 among the forms it accepts as temporary evidence at a construction closing. Each names its own contents. The bank's guide asks for the property address, amount of coverage, contractor's name, the bank as mortgagee, and the policy and expiration dates. WHEDA asks for the dates of coverage, dollar amount, property covered, insurer, policy number, the agent who placed the insurance, and the lender as an additional insured.

Bind the builder's risk policy with the lender already named on it, then have the agent issue the evidence form the lender asked for. The order matters. Construction lenders check dates as well as names. Capital City Bank's internal staff guide has its loan administrators confirm that "the effective date of the policy precedes the date of the commencement and funding," and Mercantile Bank's residential construction loan guide tells home borrowers builder's risk "must be in place before the first draw."

The lender's role on the policy is the other half. The same staff guide calls for the bank to be named as mortgagee and explains why: a mortgagee gets rights a loss payee does not, including "the right to advance notice of any cancellation or non-renewal" and "the right to pay the premium and prevent a lapse in coverage." Its own list of what the evidence must show is short: the property address, amount of coverage, contractor's name, the bank as mortgagee, and the policy and expiration dates.

Some lenders treat the evidence form as a stopgap. WHEDA accepts ACORD 27 as temporary evidence at a construction closing and asks for a copy of the policy each year until construction is complete, and Capital City Bank's guide has staff review the builder's risk coverage form alongside the ACORD. Fannie Mae's multifamily guide, written for loans sold to Fannie rather than for construction loans, wants permanent evidence within 90 days after Mortgage Loan Delivery and does not accept certificates of insurance or binders as permanent evidence. Ask the lender whether it wants the policy itself, and request the policy forms list when you bind.