Loss Payable Clause

A loss payable clause is a provides insurance coverage to a lender (mortgagee) when property used as security for a loan is destroyed or damaged.

This type of insurance terms can provide protection for both real property and personal property.

For example, if a house that is mortgaged is condemned due to structural problems that was not present when the property was first used as collateral, and the borrower defaults on the home loan, then the bank would be able to claim for losses up to the outstanding balance on the mortgage. read more