Where an insurance company paid a fire loss entirely to the homeowner, and the mortgagee was not named in the policy, the mortgagee's interests "did not appear" (no "ATIMA") and so the mortgagee had no claim on the insurance proceeds whatsoever. The Universal Holding: Mortgagee's case dismissed against the insurance company. The most recent example is provided by Zaghi v. State Farm Gen. Ins. Co., 77 F. Supp. 3d 974, 978 (N.D. Cal. 2015).
The settled rule is discussed, along with related issues, in § 3.10, "What's Behind the Charge of Unnecessary Policies" in Dennis J. Wall, "Lender Force-Placed Insurance Practices" (The American Bar Association 2015). "ATIMA" means that the mortgagees' interests are protected under homeowner's policies "as their interests may appear." This provision is usually coupled in the homeowner's policy with a requirement that the mortgagee shall be named on the check in the event that the insurance company pays proceeds under the policy.
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