Los Angeles Claims Adjuster Property and Causality Practice Exam

What clause ensures that a loss payee listed in the policy will be informed of any cancellations or nonrenewals?

1. Loss Payable Clause

2. Aggregate limit

3. Coverage endorsement

4. Nonconcurrency clause

The correct answer is: Loss Payable Clause

The Loss Payable Clause is specifically designed to protect the interests of third parties, such as loss payees, in an insurance policy. This clause ensures that the loss payee will receive due notification in the event that the policy is canceled or not renewed. By including this clause, the insurer commits to informing the loss payee of these changes, thereby safeguarding their financial interests associated with the insured property. Additionally, this clause can provide the loss payee with rights to file claims directly or to be compensated in the event of a covered loss. This is essential in situations where the insured may have obligations to the loss payee, such as in financing or loan arrangements, ensuring the loss payee is aware and can take appropriate actions in response to any potential risk of coverage being discontinued.