PLIllinoismedium
Under the Illinois Standard Fire Policy, if the insurer denies the insured's claim due to the insured's act, what protection does the named mortgagee retain?
AThe mortgagee receives nothing because the policy is voided
BThe mortgagee must purchase its own separate policy
CThe mortgagee receives only 50% of the claim
The mortgagee may still recover to the extent of its interest
Why this is the answer
The Illinois Standard Fire Insurance Policy at 215 ILCS 5/397 incorporates the standard mortgage clause, which protects the mortgagee even if the insured's act or neglect (such as fraud or concealment) would otherwise void coverage. The mortgagee can recover up to the extent of its insurable interest, provided it complies with notice and premium-payment obligations after the insured's default. This is a core feature distinguishing the standard mortgage clause from the older open-loss-payable clause.
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