RS 5386 - Mortgage including pledge of mortgagor's rights to insurance
A. A mortgage of an immovable may contain a pledge of the mortgagor's rights under policies of insurance covering the immovable. In that event, the pledge has effect as to third persons when the act of mortgage is recorded in the manner prescribed by law, without the necessity of notice to the insurer, and continues to have that effect for so long as the mortgage is given the effect of recordation.
B. The rights of the mortgagee against the insurer shall be subject to any dealing by the insurer with the mortgagor, any other assignee or pledgee, or other successor in interest of the mortgagor until the insurer receives written notice from or on behalf of the mortgagee or the mortgagor of the collateral assignment or pledge of the right to receive the insurance proceeds. In any case in which an insurer is not notified in writing of the assignment or pledge of the right to receive insurance proceeds made in compliance with the provisions of this Section and, in good faith, makes payment of the insurance proceeds attributable to the loss of the mortgaged property in whole or in part to the mortgagor, any other assignee or pledgee, or other successor in interest of the mortgagor, then, to the extent of payment, the insurer shall be exonerated of liability to make payment to the mortgagee; however, the person to whom payment was made shall be accountable and liable to the mortgagee for the sums received. The pledge of the mortgagor's rights to insurance does not modify the obligations of the insurer under any simple or standard or other loss payee clause of its insurance policy.
C. A pledge of the mortgagor's rights under policies of insurance covering an immovable shall not be invalid, ineffective, or fraudulent against other creditors by reason of the mortgagor's freedom to use, commingle, or dispose of proceeds of the insurance, or by reason of the mortgagee's failure to require the mortgagor to account for the proceeds.
Acts 1990, No. 1079, §3, eff. Sept. 1, 1990; Acts 2014, No. 281, §2, eff. Jan. 1, 2015.