Loss payee/mortgagee designation is a safety and soundness issue. But from a risk standpoint, under what scenario would you not do this for all insurance policies currently required to be maintain by your customers? On a NFIP policy, if you are a valid mortgage holder, you are a loss payee whether or not specifically named in the policy. That may or may not be true for other insurance policies.
"Any loss payable under Coverage A - Building Property will be paid to any mortgagee of whom we have actual notice as well as any other mortgagee or loss payee determined to exist at the time of loss, and you, as interests appear. If more than one mortgagee is named, the order of payment will be the same as the order of precedence of the mortgages. "
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