New Insurance Form Mortagee Clause

It establishes that loss to mortgaged property is payable to the mortgagee named in the policy and promises advance written notice to the mortgagee of policy cancellation.

New insurance form mortagee clause. Typically under a mortgagee clause it is specified that the mortgagee usually a bank will still receive an insurance payout in the event of a claim regardless of any violations a mortgagor may have made. A mortgagee clause is a clause in a property insurance policy which states that the property insurance company will pay out any claims to both the mortgagor mortgage holder and the mortgagee mortgage lender. In real estate transaction the term mortgagee clause has become almost a standard as it ensures complete protection for the lender in case of a loss. Your new insurance company is simply making sure they have an exact record of who has financial interest in the property.

The legal description of the entity that has financial interest in the property that you have bought with its money is what is referred to as a mortgagee clause in insurance papers. The mortgage clause requires the insurer to notify the mortgage holder in writing if the insurer cancels the policy or refuses to renew it. You will remember the requirement to purchase hazard insurance in order to satisfy lender requirements. If the insured has failed to pay the premium the insurer must notify the lender 10 days in advance before canceling the policy.

This protects your lender caliber home loans so we can ensure the damage is completely repaired and the property is brought back to its original state. Technically the two are not the same but they are often used interchangeably. You may be asked to provide the mortgagee clause when you switch homeowners insurance companies or first purchase a home.