What is an obligation that arises if the insured fails to notify the insurer of a loss?

The correct choice reflects the procedural rights of parties involved in an insurance contract when the insured fails to notify the insurer of a loss. If the insured does not inform the insurer promptly, it does not automatically mean that the insurer is liable for the claim. Instead, a mortgagee, who is often a lender with an interest in the property, may retain the right to file a proof of loss independently. This can allow the mortgagee to seek recovery under the insurance policy, ensuring their financial interests are protected, regardless of the insured's failure to communicate.

In many insurance policies, the mortgagee's rights are typically preserved. When a loss occurs, each policy directive can dictate what steps or notifications need to be taken, and the mortgagee can act on those terms even if the insured has not given proper notice.

This context is significant because it emphasizes the contractual obligations and the rights of third parties involved in insurance coverage, illustrating how responsibilities and actions may vary based on specific situations and the roles of different parties.