What does the 'standard mortgage clause' in a homeowners policy provide?

The standard mortgage clause (also called the standard mortgagee clause) protects the lender's interest in mortgaged property. Key provisions: (1) The mortgage lender is named as an additional insured with insurable interest; (2) The lender receives separate notice of cancellation or non-renewal (typically 10-30 days) so it can protect its interest; (3) If the homeowner's actions void coverage (arson, fraud, non-payment of premium), the lender's coverage is preserved; (4) Loss payments are issued jointly to homeowner and lender, or to the lender directly for major losses, to ensure repairs are made rather than the money being kept and the property left damaged. The mortgage clause is required by virtually all lenders before they will finance a property. After paying the lender, the insurer may have subrogation rights against the homeowner if the homeowner caused the loss intentionally.