ACORD 28 vs ACORD 25: what's the difference and which one does my lender need?

An ACORD 28 is the Evidence of Commercial Property Insurance form. It documents coverage on the building itself (replacement cost, deductible, coinsurance, perils) and names the lender as mortgagee or lender's loss payable. An ACORD 25 is the Certificate of Liability Insurance, which documents general liability and similar claims coverage. A lender securing a building wants proof of property coverage, so it asks for the ACORD 28. Many lenders need both forms, but the ACORD 28 is the one that satisfies the property condition for closing.

What is evidence of insurance vs a certificate of insurance?

They are different ACORD forms for different things. Evidence of insurance, the ACORD 28, confirms property coverage on a specific building and is what a real estate lender wants before it funds, because the building is its collateral. A certificate of insurance, the ACORD 25, confirms liability coverage and is what you typically hand to vendors, landlords, and contracting parties. A certificate of liability does not evidence property coverage, so it generally will not satisfy a lender's property condition on a commercial real estate loan. Read the requirements letter, which usually names the exact form the lender expects.

What can be used as proof of insurance for a lender?

On a commercial real estate loan, the lender generally wants the ACORD 28 Evidence of Commercial Property Insurance, naming it as mortgagee or lender's loss payable, plus a paid binder confirming the coverage is in force. The ACORD 28 documents the building limit, deductible, coinsurance or agreed value, and covered perils. If liability coverage is also required, the lender will ask for an ACORD 25 certificate as well. A general declarations page or a liability certificate alone usually will not satisfy the property condition, so check the requirements letter for the exact forms and naming language.

Where do I get the exact mortgagee wording for the ACORD 28?

From the lender, not from your broker's best guess. Lenders publish their own required mortgagee language: the legal lender name, mailing address, usually the 'ISAOA/ATIMA' phrase, and your loan number. The safest source is the loan documents or the closing instructions, and on a refinance or servicing transfer the new servicer issues updated wording. That text goes onto the property policy and the ACORD 28 exactly as written, since a misspelled name, an old address, or a missing loan number is a common reason a lender bounces the evidence of insurance. For what the mortgagee designation actually grants versus a loss payee or additional insured, see our guide to mortgagee clause vs. loss payee vs. additional insured.

Insurance to close a commercial real estate loan in Arizona: the borrower's checklist

Q: What is an ACORD 28 form?

The ACORD 28 is the standardized Evidence of Commercial Property Insurance form. It shows that a specific building is insured and lays out the limit, deductible, coinsurance or agreed value, covered perils, and the lender's status as mortgagee or loss payable. According to Insureon, the ACORD 28 is the form issued to lenders, mortgagees, and loss payees who need written confirmation of property coverage before a loan closes. Your broker completes it from the bound policy. It is distinct from the ACORD 25 certificate of liability, which covers liability rather than the building.

You have a term sheet on a commercial building in Arizona, a closing date, and a loan officer asking for proof of insurance. The instructions usually arrive as a dense insurance requirements letter, and a missing endorsement or the wrong ACORD form can stall funding at the worst moment. This is the document-and-timeline checklist that gets a commercial real estate loan to the closing table, written for borrowers and the loan officers chasing them.

For the underlying coverage rules, pair this with our deeper guide to commercial loan insurance requirements. Here we focus on the closing mechanics: which forms, which endorsements, how much, and when.

What insurance does a commercial lender require to close?

A commercial lender generally requires property insurance on the building, written to full replacement cost, with the lender named as a secured party and proof delivered on the right ACORD form before funding. The building is the lender’s collateral, so its main concern is that a fire or other loss leaves enough insurance money to rebuild and protect the loan.

In practice the requirements letter usually asks for several things at once: a property limit at replacement cost, the lender named as mortgagee or lender’s loss payable, an ACORD 28 evidencing the property coverage, often general liability with the lender as additional insured, frequently business income or rent loss coverage, and flood coverage if the building sits in a flood zone. Each item has its own line on the form, and lenders read them carefully.

Start early. The most common cause of a delayed commercial closing is insurance that was ordered too late, especially on a building that needs to be placed through specialty markets.

Why does my lender require more insurance than my loan amount?

Lenders base property limits on what it costs to rebuild the building, not on your loan balance. A $1.2 million loan on a building that costs $1.8 million to reconstruct still needs limits near the $1.8 million replacement cost, because a total loss has to fund a full rebuild.

This is where coinsurance bites. A coinsurance clause requires you to insure to a set percentage of replacement cost, commonly 80, 90, or 100 percent. Insure for less and the insurer reduces your claim payment by the same proportion. Coinsurance is measured against replacement cost, not the loan amount, which is exactly why underinsuring to save premium backfires at claim time.

Most institutional lenders go a step further and require an agreed value (agreed amount) endorsement that suspends the coinsurance penalty, so a covered loss is paid in full up to the agreed limit rather than being reduced for underinsurance. Confirm that endorsement is on your quote, and that it is renewed each year, since it lapses if the statement of values isn’t refreshed. For a sense of what replacement-cost limits do to premium, see how much commercial property insurance costs in Arizona.

What is the ACORD 28, and why not an ACORD 25?

The ACORD 28 is the Evidence of Commercial Property Insurance form, and it is the one your lender wants for closing. It documents coverage on the building: the limit, deductible, coinsurance or agreed value, covered perils, and the lender’s status as mortgagee or loss payable. According to Insureon, the ACORD 28 is the form issued to lenders, mortgagees, and loss payees who need written confirmation of property coverage before a loan closes.

The ACORD 25 is the Certificate of Liability Insurance. It documents liability coverage (general liability, auto, umbrella) and is what you give vendors and landlords. It does not evidence property coverage, so it will not satisfy the property condition on a real estate loan. Many lenders ask for both: the ACORD 28 for the building, the ACORD 25 for liability. If you are new to these forms, our explainer on what a certificate of insurance is covers the basics.

How should the lender be named: mortgagee, loss payee, or additional insured?

Get this right and most closing friction disappears. On property coverage, a commercial real estate lender is named as mortgagee or lender’s loss payable, which gives it rights to claim proceeds and notice of cancellation. On liability coverage, the lender is often named as additional insured. These are different roles on different policies, and using the wrong one is a frequent reason a lender kicks back a certificate.

The exact wording, including the full lender name and “its successors and assigns as their interests may appear,” is usually dictated in the loan documents. Copy it verbatim onto the forms. Our guide to mortgagee clause vs. loss payee vs. additional insured breaks down what each status actually grants.

Do I need flood insurance to close?

You need flood insurance if the building sits in a FEMA Special Flood Hazard Area, and the lender will run a flood zone determination to find out. Federal rules require flood coverage on federally backed or federally regulated loans for buildings in those zones, and most other lenders apply the same standard.

Through the National Flood Insurance Program, a non-residential building can be insured up to $500,000 for the structure and a separate $500,000 for contents, per FloodSmart. Larger buildings exceed those caps and need excess or private flood coverage stacked on top. Even outside a mapped zone, some Arizona lenders ask for flood coverage given the state’s flash-flood exposure, so check the requirements letter rather than assuming.

The closing checklist and timeline

Work the requirements letter line by line:

Read the insurance requirements letter first. Note the property limit basis (replacement cost), coinsurance or agreed value, liability limits, business income or rent loss requirement, and the exact lender naming language.
Order coverage as soon as you have a closing date. Hard-to-place buildings go out to excess and surplus markets, which takes longer.
Confirm the building limit equals replacement cost and that coinsurance is suspended by an agreed value endorsement (renewed each year with a fresh statement of values).
Add flood if the determination flags a flood zone.
Name the lender correctly: mortgagee or loss payable on property, additional insured on liability, with the verbatim wording.
Get a paid binder and the ACORD 28 to the lender and title company before funding.
Keep it in force. A lapse can trigger force-placed insurance and may be a loan default.

Where BrokerPro fits

BrokerPro places lender-ready property coverage on the Arizona buildings that hang up commercial closings, including vacant, older, lessor’s risk only, and previously declined properties, through standard and excess and surplus markets. We issue the ACORD 28 with the correct mortgagee or loss-payable wording, match limits to replacement cost, and add flood when the zone requires it, so your loan funds on schedule. Submit your property for a quote, or if you are a lender, CRE agent, or property manager, see how we work with lenders and referral partners.