An Illinois insured finances a new vehicle. The auto lender requires which physical damage policy provision to protect its security interest in the car?

Why this is the answer

When a personal auto is financed, the lender holds a security interest and requires the policy to include a loss payable clause naming it as loss payee. The clause directs physical damage (comprehensive and collision) payments to the lienholder up to the unpaid loan balance and obligates the insurer to give the lienholder notice of cancellation. Stated value endorsements, vicarious liability, and named driver exclusions do not protect the lender's collateral interest.