Mortgagee’s Rights When Insured’s Claim Is Denied
This clause has been interpreted by almost all courts that have been asked to construe it to mean that such acts that would ordinarily void the policy, such as committing arson or bringing dynamite on the premises, would merely invalidate the policy as to the mortgagor. They do not affect the coverage available to the mortgagee.
The majority of courts interpret the standard mortgage clause as a separate contract from that which exists between the insurer and the mortgagor.
The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library.
(c) 2015, Barry Zalma
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