§ 1488 Bank Control Of Insurance Proceeds

Financial Code·California

AI SummaryVerified

This law says that if a mortgage or deed of trust lets a bank get the insurance money from a fire, flood, or other hazard, the bank can still take that money even if the damage hurts the value of the property used as security.

Key Takeaways

•A bank’s right to insurance proceeds is enforceable if the loan documents say so.
•That right stays valid even if the property’s value drops because of the damage.
•It applies to any state‑chartered or nationally chartered bank and to fire, flood, or other hazard insurance.

Example

A homeowner's house is badly damaged by a flood and the insurance company sends a check for the loss.

Because the mortgage paperwork gave the bank the right to receive the insurance payout, the bank can collect that check, even though the house is now damaged and the loan’s security is weaker.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 1488 Bank Control Of Insurance Proceeds

The provisions of any deed of trust or mortgage on real property which authorize any state or nationally chartered bank to receive and control the disbursement of the proceeds of any policy of fire, flood, or other hazard insurance respecting the real property shall be enforceable whether or not an impairment of the security interest in the property has resulted from the event that caused the proceeds of the insurance policy to become payable. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Last verified: January 11, 2026

Key Terms

deed of trust mortgage state or nationally chartered bank disbursement of the proceeds fire, flood, or other hazard insurance security interest

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1488.

§ 1488 Bank Control Of Insurance Proceeds

Financial Code·California

AI SummaryVerified

§ 1488 Bank Control Of Insurance Proceeds

Key Takeaways

•A bank’s right to insurance proceeds is enforceable if the loan documents say so.
•That right stays valid even if the property’s value drops because of the damage.
•It applies to any state‑chartered or nationally chartered bank and to fire, flood, or other hazard insurance.

Example

A homeowner's house is badly damaged by a flood and the insurance company sends a check for the loss.

Because the mortgage paperwork gave the bank the right to receive the insurance payout, the bank can collect that check, even though the house is now damaged and the loan’s security is weaker.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 1488 Bank Control Of Insurance Proceeds

Last verified: January 11, 2026

Key Terms

deed of trust mortgage state or nationally chartered bank disbursement of the proceeds fire, flood, or other hazard insurance security interest

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1488.

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References