If the Insured breaches a policy condition, the Standard Mortgage Clause guarantees the mortgagee will be paid?

The Standard Mortgage Clause is designed to protect the interests of the mortgagee (lender) in the event that the insured property suffers a loss and the insured has breached a condition of the insurance policy. This clause ensures that the mortgagee is compensated for their financial stake in the property, regardless of any policy violations committed by the insured.

When a breach occurs, the insurer may deny coverage to the insured themselves, but the Standard Mortgage Clause allows the mortgagee to still receive payment for the outstanding debt on the property. This means that the mortgagee will be paid for their interest in the property—essentially the amount they are owed on the mortgage—regardless of the insured’s actions. Thus, securing the mortgagee’s investment is a priority, providing them with assurance that their financial interest will still be honored even when the policy conditions are not fully met by the insured.

In this case, the correct choice highlights the protection provided specifically to the mortgagee's financial interest, which may or may not cover the full amount of insurance or any specific valuation of the property.