A more thorough explanation:

A union mortgage clause is a provision in an insurance policy that protects the rights of a mortgagee when the insured property is subject to a mortgage. It is also known as a standard mortgage clause.

This clause ensures that any insurance proceeds are allocated between the named insured and the mortgagee "as their interests may appear." This means that if there is damage to the property, the insurance company will pay out to both the property owner and the mortgage holder based on their respective interests in the property.

For example, if a homeowner has a mortgage on their property and the property is damaged in a fire, the insurance company will pay out to both the homeowner and the mortgage company based on their interests in the property. The mortgage company will receive their portion of the payout to cover their interest in the property, while the homeowner will receive the remaining amount to cover their interest.

The union mortgage clause is important because it protects the mortgagee's interest even if the insured mortgagor does something to invalidate the policy. This clause creates a separate contract between the insurer and the mortgagee, ensuring that the mortgagee is protected in the event of damage to the property.