A homeowner intentionally sets fire to his own insured house. Under the standard mortgage clause, the mortgagee:
Explanation
The standard mortgage clause creates a separate contract between the insurer and the mortgagee, so the mortgagee's interest survives acts of the owner that would defeat the owner's own claim, arson and misrepresentation included. Having paid, the insurer takes an assignment of the mortgage or subrogates against the owner. The mortgagee need not sue first, and it is owed its interest rather than a premium refund.
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