Common use of Earthquake Clause in Contracts

Earthquake. If Lender requires earthquake Insurance, the amount of coverage will be equal to the greater of the following: (A) $1,000,000. (B) 150% of the difference between the following items: (1) The Replacement Cost of the Mortgaged Property multiplied by the probable maximum loss for the Mortgaged Property, as determined by a Site Specific Seismic Report. (2) The Replacement Cost of the Mortgaged Property multiplied by the projected loss with a 20% probable maximum loss. Lender will not require earthquake Insurance if the probable maximum loss for the Mortgaged Property is less than 20%. If any updated reports or other documentation are reasonably required by Lender in order to determine whether such additional Insurance is necessary or prudent, Borrower will pay for all such documentation at its sole cost and expense.