SECTION 1. Chapter 167B of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting after section 11, the following section:
Section 12. If the lender, as a result of neglect, fails to pay the insurance premium on a property insurance policy on property secured by a mortgage when the insurance premium is due and there are sufficient escrowed funds on deposit to pay said insurance premium, and if the property owner suffers a loss as a result of this failure, then the lender is liable for the loss; except, however, that with respect to any loss, which would otherwise have been insured, the extent of the liability shall not exceed the coverage limits of any insurance policy, which has lapsed. The lender shall pay the insurance premium and any increased cost for securing a new insurance policy for a period of three (3) years. If the lender is late in paying the insurance premium, the lender shall pay the late fee charged by the insurance company.
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