Which property insurance provision protects the insurable interest of a financial institution?

The mortgage clause is a provision found in property insurance policies that specifically protects the insurable interest of financial institutions, such as banks or mortgage lenders, in the property that secures a loan. This clause ensures that if a property is damaged or destroyed, the lender has a right to receive payment from the insurance policy to cover its financial interest, even if the borrower defaults or if there are other claims on the policy.

This provision typically requires the insurance company to pay the mortgage holder directly for any claims, ensuring that the financial institution's investment is protected. It is important in maintaining the security of loans, as it provides confidence to the lender that they can recover their losses in the event of a property-related incident.

In contrast, the other options do not specifically address the protection of a financial institution's interest in the same manner as the mortgage clause does. Liability clauses pertain to personal injuries or damages caused by the insured, collateral clauses relate to securing loans with physical assets, and loan clauses do not have a specific definition or established role within property insurance relating to protecting a financial institution's interest.