Anyone who has at least partial ownership of the property could be a loss payee. There can be other loss payees aside from mortgage lenders, too.
Then, the insurance company can recover that settlement from the homeowner that committed the fraud (fraud is never a good idea, in other words). However, their mortgage lender would still get a settlement for their share of the property. If the homeowner intentionally burns down their house for the insurance money, they get nothing-that’s insurance fraud. They even get their share if the homeowner does something to violate the terms of the policy. The lender gets their share of any claim settlements. If the home were damaged, any claim settlement would be made co-payable to the mortgage lender and the homeowner.Įvery home insurance policy in Canada includes the Standard Mortgage Clause, which explains how the mortgage lender fits into the insurance picture. Once the policy includes the mortgage lender, the lender becomes a loss payee. To that end, mortgage lenders always require that the homeowner add them to the home insurance policy. If your home has a mortgage, the mortgage lender has an insurable interest in it, and they want to protect their investment. It gets more complicated once mortgages and co-owners come into the picture: anyone who has an insurable interest in the property can be a loss payee.
In this case, you’re the only loss payee on the policy. If you own your property outright, your insurance policy will pay you for any insurable losses. At the surface, loss payee is a simple term in insurance policies: a loss payee is a person who receives payment following a claim.
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