Florida Insurance Licensing Practice Exam

If a lender has an insurable interest in an auto because of the money loaned to finance the purchase, the lender would appear on the policy as the:

1. Lessee

2. Loss Payee

3. Mortgagor

4. Mortgagee

The correct answer is: Loss Payee

Explanation The other options refer to different parties involved in a loan agreement. A lessee is a person who leases or rents a property from a lessor, so this option is incorrect. A mortgagor is a borrower who pledges their property (e.g. a car) as collateral for a loan, so this option is also incorrect. A mortgagee, on the other hand, is the lender or a bank that provides the loan, so while it has an insurable interest in the auto, it is not the correct answer in this scenario. The correct answer, loss payee, specifically refers to a party that will receive insurance proceeds in the event of a loss or damage to the property. In this case, the lender has an insurable interest in the auto and would receive the insurance payout if the car were to be damaged or totaled.