A New Angle Of The Mortgaged House Insurance

Mortgaged house insurance refers to an insurance which the lender require the borrower to insure the mortgaged house, to safeguard its loan. Mortgaged house insurance is a win-win design. It protects the ownership, with which the homebuyer can restore or rebuild his damaged house. It protects the mortgage, with which the bank can fulfill its mortgage debt. This essay employs comparative approach and empirical approach to fully study the mortgaged house insurance. By demonstrating the bank’s independent insurable interest and the necessity of balancing the mortgage and ownership, this essay points out that the bank can use insurance clause in mortgage contract to become an independent insured, and the bank’s right to utilize insurance benefit should be reasonably restricted.Apart from the preamble and conclusion, this essay can be divided into four chapters:Chapter 1 is “the Necessity of Mortgaged House Insurance”. The writer designs teaching cases in 8 different conditions to analyze our three mortgaged house insurance types—subrogation of mortgaged house insurance benefit, convention of mortgaged house insurance benefit and loss payable clause. All the three types are subordinate, whereby the bank doesn’t enjoy an independent insurance right. Besides how to use mortgaged house insurance to independently protect bank’s mortgage, our current legal rules and practical operations don’t have concretive rules concerning the priority of using insurance benefits between the bank and the homebuyer.Chapter 2 is “the Mortgagee’s Independent Insurance Benefit Right”. Insurable interest is the foundation of an insurance contract. The English learners’ and American learners’ opinions are largely identical but with minor differences that the mortgagee enjoys an insurable interest different from the mortgagor’s because the mortgagee use the mortgaged house as an guarantee of its debt fulfillment. The Germany’s “General insurable interest” distinguishes insurance and gamble, and “Technical insurable interest” acknowledges that different insurable interests can coexist in an identical object, confirming that mortgage also can be an insurable interest. However there still exists debate between positive theory and negative theory. Then this essay research into the American institutional regulations in mortgaged house insurance. Thirdly, this essay analyzes a large number of cases, summarizing the judicial opinions on this subject. All courts acknowledge the mortgagee’s independent insurable interest. Lastly, this essay points out that there are some theories acknowledging the mortgagee’s insurable interest.Chapter 3 is “Dispute and Divergent Ideas Between the Bank and the Homebuyer on Usage of Insurance Benefit”. The first and second quarters discuss two opposite opinions of the US courts. Some courts support the bank, because the benefit practically is the money form of the mortgagee’s interest and the parties have expressly agreed on the usage of insurance benefit. Instead, some other courts support the homebuyer, because the homebuyer may face a financial predicament and the whole mortgage system aims at helping residents getting their own houses. The third quarter summarizes the American experiences, “on the basis of autonomy of will, the bank’s usage of benefit should be reasonably restricted by the justice of contract and judicial efficiency.Chapter 4 is “Establishing the New Type of Mortgaged House Insurance”. Firstly, this essay analyzes the feasibility of using the standard mortgage clause for reference. By the standard mortgage clause, the bank can achieve the fullest protection at minimum cost. And it can balance the bank, the homebuyer and the insurer. The legislations and theories have already matured. Some of our current rules and practices to a certain extent resemble the American loss payable clause. Secondly, this essay comes up with its own conclusions about how to establish a new type of mortgaged house insurance and evaluate its advantages and innovative points. Lastly, use the new type mortgaged house insurance to solve the foregoing teaching cases, demonstrating that this new type can effectively solve problems existing in the actual situation of mortgaged house insurance.