Insurance on Property - 2.4

Under the (IBC) Standard Mortgage Clause:
a) Some provisions benefit the mortgagee. Briefly, describe three such benefits.
b) Which provision might be valuable to the insurer?

Answer:

a) The main benifit of a mortgage clause for the mortgagee is that the policy covers the mortgagee even if the named insured is unable to recover because a condition of the policy has been breached.

The mortgage clause permits the mortgagee to give notice of loss immediately on becoming aware of it, and proof of loss as soon as practicable.

The clause also includes the mortgagee and its assigns among those whom the insurer, acquiring title to the insured property, must continue to insure until the policy is cancelled or expires.

b) Under the mortgage clause, the insurer, having indemnified the mortgagee for a loss, becomes subrogated to the rights of the mortgagee against the insured, but only to the amount of the loss paid to the mortgagee.