PLNew Yorkmedium
Under the standard mortgage clause incorporated through N.Y. Ins. Law § 3404, a New York homeowners insurer's protection of the mortgagee:
AIs voided whenever the insured commits any act that voids coverage for the insured
BExtends only to the unpaid principal balance and no accrued interest
Survives most acts or neglect of the insured, provided the mortgagee complies with notice, proof, and premium obligations on demand
DRequires the mortgagee to obtain its own separate policy
Why this is the answer
The standard mortgage clause embedded in N.Y. Ins. Law § 3404 creates a separate contract between the insurer and the mortgagee. The insured's misrepresentation, fraud, or breach of condition voids coverage as to the insured but does not bar the mortgagee from recovering, as long as the mortgagee (a) gives notice of any known change in occupancy or hazard, (b) pays the premium on demand if the insured does not, and (c) submits proof of loss when the insured fails. The insurer's payment can then be subrogated against the insured to the extent of the mortgage interest.
Studying for the New York Personal Lines exam?
This question comes from our PL bank. Take a free practice test — no signup.