Land And Conveyancing Law Reform Act 2009
110.— (1) A mortgagee may insure and keep insured any building, effects or other property of an insurable nature, whether affixed to the land or not, which forms part of the mortgaged property.
[CA 1881, ss. 19(1)(ii), 23]
(2) The insurance shall be for the full reinstatement cost of repairing any loss or damage arising from fire, flood, storm, tempest or other perils commonly covered by a policy of comprehensive insurance.
(3) The mortgagee may give a good discharge for any money payable under any such insurance, but, subject to subsection (4), so much of such money as exceeds the mortgage debt shall be dealt with by the mortgagee as if it were the proceeds of a sale of the mortgaged property.
(4) The mortgagee may require any money received under such or other insurance of the mortgaged property to be applied—
( a) by the mortgagor in making good loss or damage covered by the insurance, or
( b) in or towards the discharge of the mortgage debt.