Georgia Property & Casualty Practice Exam

Which of the following parties cannot be protected by a property or casualty insurance policy without a special endorsement?

1. Secured creditors

2. Mortgage holders

3. Loss payees

4. Bailees

The correct answer is: Mortgage holders

A property or casualty insurance policy typically provides coverage to the insured, and in certain situations, it can extend coverage to others, but not all parties can be automatically included in the policy. Mortgage holders are often protected under standard property insurance policies from damage to the property that secures their loans. However, their protection usually relies on the customary language of the insurance policy, which includes agreements that stipulate their insurable interest. Therefore, mortgage holders might not automatically receive coverage and would typically need a special endorsement to ensure their interests are safeguarded. On the other hand, secured creditors, loss payees, and bailees may be recognized under the typical terms of property policies. For example, secured creditors usually have a vested interest in being compensated in the event of a loss, as do loss payees. Bailees, who temporarily hold someone else's property, also might have coverage under the standard terms if they are listed appropriately in the policy. Thus, among the parties listed, mortgage holders are the ones who cannot be automatically protected by a property or casualty insurance policy without a special endorsement, making this the correct answer.