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Commercial Mortgage Clause


This clause applies to commercial policies only and applies only to the mortgagee which is specifically listed on the Declarations.

a.   The term “mortgage holder” includes trustee.
b.   We will pay for covered loss of or damage to buildings or structures to each mortgage holder shown in the Declarations in their order of precedence, as interests may appear.
c.   The mortgage holder has the right to receive loss payment even if the mortgage holder has started foreclosure or similar action on the building or structure.
d.   If we deny your claim because of your acts or because you have failed to comply with the terms of this policy, the mortgage holder will still have the right to receive loss payment if the mortgage holder:
  (1) Pays any premium due under this policy at our request if you have failed to do so:
  (2) Submits a signed, sworn proof of loss within 60 days after receiving notice from us of your failure to do so; and
  (3) Has notified us of any change in ownership, occupancy or substantial change in risk known to the mortgage holder.
All terms of this policy will then apply directly to the mortgage holder.
e.   If we pay the mortgage holder for any loss or damage and deny payment to you because of your acts or because you have failed to comply with the terms of this policy:
  (1) The mortgage holder’s rights under the mortgage will be transferred to us to the extent of the amount we pay; and
  (2) The mortgage holder’s right to recover the full amount of the mortgage holder’s claim will not be impaired.
At our option, we may pay to the mortgage holder the whole principal on the mortgage plus any accrued interest. In this event, your mortgage and note will be transferred to us and you will pay your remaining mortgage debt to us.
f.   If we cancel this policy, we will give written notice to the mortgage holder at least:
  (1) 10 days before the effective date of the cancellation if we cancel for your non-payment of premium; or
  (2) 30 days before the effective date of cancellation if we cancel for any other reason.
g. If we elect not to renew this policy, we will give written notice to the mortgage holder at least 10 days before the expiration date of this policy.

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