The clause that protects the lender in a real property policy is the?

• A. Mortgagee Clause
• B. Endorsement
• C. Subrogation
• D. Waiver

Answer: (A)

The lender’s protection in a real property policy is provided by a mortgagee clause. This endorsement designates the lender’s interest and ensures they receive the insurance proceeds for covered losses, typically directing payment to the mortgagee as their loss‑payee. It also requires the insurer to notify the mortgagee of policy changes, such as cancellations or nonrenewals, so the lender’s security interest isn’t jeopardized. By keeping the lender in the loop and directing payments to them, the mortgagee clause preserves the lender’s rights even if the borrower’s claim or ownership status changes.

Endorsements in general modify a policy, but they’re not specifically about protecting a lender’s financial interest. Subrogation is the insurer’s right to pursue recovery from a third party after paying a claim, and a waiver is relinquishing a right, often in exchange for something else; neither specifically protects the lender like the mortgagee clause does.