This insurance is taken out by the mortgagee himself, who is then the contracting party or, to keep with the terminology in Cl. 1-1 (b) of the Plan, the “person effecting the insurance”. Financial institutions, such as banks, will often prefer to take out such insurance to cover the whole portfolio of vessels wholly or partly financed by the bank in order to facilitate the administration of the portfolio.
Mortgagee Interest Insurance is not covered under the Plan. It is covered on separate terms, most often on English conditions with some amendments or additions. The independent Mortgagee Interest Insurance covered on English conditions does not offer any protection for the mortgagee's interests in the vessel's earning capacity, only protection of the mortgagee's interests if the vessel is damaged or lost.