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The Lender’s Loss Payable is a common clause in insurance policies that protects lenders or financial entities in case a covered loss occurs that affects the property they have financed.
This clause ensures that, in the event of a claim, any payment made by the insurance company will first go to the lender, up to the amount of the debt the property owner owes to them.
Key Points to Consider:
Including a Lender’s Loss Payable clause in a policy is crucial for both lenders and borrowers. It provides an extra layer of security in financial transactions related to real estate. This not only protects the financial interests of lenders but also makes it easier for property owners to obtain financing by offering reassurance to lending institutions.
Additionally, it helps address valuation loss concerns, ensuring that lienholders are prioritized when claims are paid.
At PSIC, you can add this clause through an endorsement to your homeowners, condo, mobile home, or landlord policy to provide security to lenders, ensuring their investment is protected in case of damage to the property.
Adding this rider is important because it helps build trust between you and your lenders. It shows that you care about their investment and are taking steps to protect it. This not only safeguards their interests but also strengthens your relationship, making it easier for you to work together in the future.
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Last updated: June 27, 2023
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