Legal Definitions - simple mortgage clause

A simple mortgage clause is a provision in an insurance policy that protects the rights of a mortgagee when the insured property is subject to a mortgage. It ensures that any insurance proceeds are allocated between the named insured and the mortgagee "as their interests may appear."

For example, if a homeowner has a mortgage on their property and the property is damaged in a fire, the insurance company will pay out the insurance proceeds to both the homeowner and the mortgagee. The amount each party receives will depend on their respective interests in the property.

A simple mortgage clause differs from an open mortgage clause, which does not protect the mortgagee if the insured mortgagor does something to invalidate the policy, such as committing fraud. A standard mortgage clause, on the other hand, protects the mortgagee's interest even if the insured mortgagor does something to invalidate the policy.

Overall, a simple mortgage clause is an important provision in an insurance policy that helps protect the interests of both the homeowner and the mortgagee.