PLGeorgiamedium
Under the standard mortgage clause of a Georgia HO-3 homeowners policy, which statement about the mortgagee's rights after the insured commits an act that would void coverage is correct?
AThe mortgagee's interest is also voided because it derives from the insured
The mortgagee is still paid if it meets its own duties
CThe mortgagee receives only 50% of the loss payment
DThe mortgagee must purchase a separate policy for protection
Why this is the answer
The mortgage clause in the ISO homeowners form (HO 00 03, Section I Conditions) provides that if the insurer denies the insured's claim, that denial does not apply to a valid claim of the mortgagee, provided the mortgagee notifies the insurer of any change in ownership, occupancy, or substantial change in risk it knows of, pays any premium due on demand if the insured has not, and submits a signed, sworn statement of loss within 60 days after notice of the insured's failure to do so. If the insurer pays the mortgagee and denies payment to the insured, it is subrogated to the mortgagee's rights under the mortgage.
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