If Ruth makes a claim on the household insurance for flood damage and Grand Bank's interest is noted on the policy, to whom will the settlement cheque be payable?

• A. Ruth only
• B. Grand Bank only
• C. Ruth and Grand Bank
• D. The contractor with whom Ruth has arranged to repair the flood damage

Answer: (C)

When a lender’s interest is noted on a household policy, the policy includes a mortgagee (loss payable) clause. This clause ensures that any claim payment is issued to both the insured and the lender to protect the lender’s security and to ensure the funds are applied toward restoring the property or satisfying the loan.

In this flood-damage scenario, the settlement cheque is therefore payable to Ruth (the insured) and Grand Bank (the lender) jointly. This arrangement helps ensure that the funds are used to repair the property and, if needed, reduce the outstanding loan, while preventing cashing the cheque solely by the insured.