A loss payee clause (or loss payable clause ) is a clause in a contract of insurance That Provides, in the event of payment being white made under the policy in relation to the insured risk, That payment will be made to a third party Rather than to The insured beneficiary of the policy .
Such clauses are common to the mortgage or other security interest and the mortgagee, usually a bank, requires the property to be insured.
Although such clauses are found in other areas of insurance, they are most common in maritime insurance in relation to insuring mortgaged vessels. [ Citation needed ]
As a matter of practicality, such clauses are usually added to the end of existing policies in a separate addendum after being negotiated between the insurer and the mortgagee.
- (“The shipowner”) (the “Owner”) assigned absolutely to [the bank] (the “Assignee”) the benefit Of this policy, including all claims of any nature (including return of premiums) under this policy. Claims payable under this policy in respect of a total or constructible total or an aggregate loss or damage to property, Assignee’s mortgage interest. Subject thereto, all other claims, unless and until underwriters have received notice from the Assignee of a default under the Mortgage,
- A claim in respect of any one or more of the provisions of this Article shall not be deemed to be invalid or unenforceable. The repair, salvage or other charges, or any other charge or charge of the salvage or other charges;
- A claim in respect of any one or more of the provisions of any of the provisions of this Act shall be deemed to be invalid or unenforceable. (The “Vessel”) shall be restored to the benefit of the insured, and the liability of the insured to The “Insurers”) may be made payable directly to the Assignee’s mortgage interest.Notwithstanding the terms and conditions of this loss payable clause and notwithstanding notice of assignment, unless and until brokers receive notice from the Assignee to the contrary, brokers shall be empowered to arrange their share of any collision and salvage being white lease required in order to prevent prevention the arrest of the Vessel or to secure the release of the Vessel from arrest Following a casualty.