If coverage is requested in a liability amount that includes contemplated improvements, the following clause (or similar promulgated clauses) must be inserted on Schedule B of loan commitments and loan policies when insuring a construction loan:
“Pending disbursement of the full proceeds of the loan secured by the mortgage described herein, the Company insures only to the extent of the amount actually disbursed but increases as each disbursement is made in good faith and without knowledge of any defects in, or objections to the title, up to the face amount of the policy. Notwithstanding anything contained in this policy to the contrary, this policy does not guarantee the completion of the improvements, nor the sufficiency of funds for the completion thereof.”