This type of insurance commonly referred to as a homeowner’s policy, protects you, the insured, against loss that could be sustained in the future as a result of fire, theft or other mishaps. Because a serious loss could reduce the value of the property below the amount owed to the lender, the lender has the right to be added to your homeowner’s policy as a party who may be entitled to receive a portion of the proceeds in the event of a loss (“loss payee”).