Plaintiff Stonegate Insurance Company, a property insurer, appeals an order of the circuit court of Cook County granting summary judgment in favor of defendant Ocwen Loan Services, LLC. Defendant is the mortgagee and named loss payee in an insurance policy that was issued by plaintiff. On appeal, plaintiff argues that the circuit court erred in granting summary judgment and allowing defendant to recover under the insurance policy because (1) the insured owners did not occupy the property, which was a condition precedent to coverage, (2) questions of fact exist as to whether the mortgage clause in the policy provides defendant with coverage, and (3) the fraud clause in the policy precludes coverage for the owners of the residential premises and defendant. For the following reasons, we affirm.
There are two types of well-recognized mortgage clauses contained in property insurance policies that protect a mortgagee against losses or damages to a mortgaged property: (1) the simple mortgage clause and (2) the standard mortgage clause. Old Second National Bank v. Indiana Insurance Co., 2015 IL App (1st) 140265, ¶ 20. Under a simple mortgage clause, a mortgagee is merely an appointee who receives insurance proceeds subject to its interest in the policy and to the extent of the insured’s right of recovery. Posner v. Firemen’s Insurance Co., 49 Ill. App. 2d 209, 216 (1964). The rights of a mortgagee under a simple mortgage clause are wholly dependent on the rights of the insured (The Suburban, Inc. v. Cincinnati Insurance Co., 323 Ill. App. 3d 278, 282 (2001)) and are subject to all of the same defenses to coverage as the insured (Old Second, 2015 IL App (1st) 140265, ¶ 20). A standard mortgage clause, on the other hand, creates a separate and independent contract between the insurer and the mortgagee. Id. Under such circumstances, the mortgagee is liable only for its own breaches and is protected from being denied coverage based on the acts or omissions of the named insured or the insured’s noncompliance with the terms of the policy. Id. (citing West Bend Mutual Insurance Co. v. Salemi, 158 Ill. App. 3d 241, 246-47 (1987), and City of Chicago v. Maynur, 28 Ill. App. 3d 751 (1975)); Posner, 49 Ill. App. 2d at 214-15.