Open Mortgage Clause Law and Legal Definition
Open mortgage clause is a provision in an insurance policy which exempts a mortgagee’s interest in a property in any case where the mortgagor tries to invalidate the policy. For example, a mortgagor commits fraud and the policy gets invalidated then in such cases the mortgagee’s interest also gets invalidated. This clause is also known as simple mortgage clause. The purpose of this clause is to provide payment first to the mortgagee to the extent of his/her interest.