Changes in Insurer Security Clause Samples
The "Changes in Insurer Security" clause establishes procedures and requirements in the event that the financial stability or credit rating of an insurance provider changes during the term of an agreement. Typically, this clause obligates the insured party to monitor the insurer’s ratings and notify the other party if the insurer falls below a specified threshold, or it may require the insured to obtain replacement coverage from a more secure insurer. Its core function is to ensure that the parties remain protected by financially reliable insurance, thereby mitigating the risk of inadequate coverage due to insurer insolvency or downgrade.
Changes in Insurer Security. If an insurer under a Material Insurance ceases to carry a claims paying rating from Standard & Poor’s Corporation of at least A-, or an equivalent rating from such other rating agency approved by the Security Agent, the Borrower will promptly inform the Security Agent thereof and, at the request of the Security Agent, promptly replace the affected cover with cover from another insurer, or insurers, reasonably acceptable to the Security Agent and terminate the affected insurer’s participation in the risk, provided that there will at no time be any period when any relevant risk is not insured as required by the Financing Documents.