Chapter 167E of the General Laws is hereby amended by inserting after section 8 the following section:-
Section 8A. 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.
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