Ted purchased a home.To finance the purchase,he borrowed $140,000 from ABC Bank,pledging the home as collateral for the loan.Shortly after purchasing the home,Ted lost his job.He could not find another job and could not pay the mortgage each month.Ted set fire to the home.The claims adjuster suspected arson,and an investigation proved that Ted intentionally caused the loss.Under the mortgage clause of the Homeowners 3 policy,how will this loss be settled?

Question

Quizplus · Accepted Answer

Under the mortgage clause of the Homeowners 3 policy, the insurer must protect the interest of the mortgagee (ABC Bank) by paying the value of its insurable interest in the property as soon as practicable, regardless of any act or neglect of any insured. The insurer can then attempt to recoup the loss payment from the insured (Ted) because the loss was intentional.

Ted Purchased a Home