HOA as "additional insured" or "loss payee" on homeowner insurance

I am a board member of a small HOA. Our covenants state that homeowners shall carry sufficient hazard insurance "naming the Association as an additional insured or loss payee." The Board is under the impression that by being named on the homeowners' insurance, the HOA can be sure that insurance proceeds will be used to restore the property to its original condition. It is our fear that unscrupulous homeowners could take the insurance proceeds and spend only enough to "cobble together" their property, perhaps to a less than desirable condition, and then pocket the remaining insurance proceeds. We realize that this could not happen with mortgaged property, but what if the homeowner has paid for his residence? Would having additional insured/loss payee status on the insurance mean that the HOA would be included on any insurance checks and would have to endorse those checks? If that is the case, we would have some leverage to ensure that the proceeds are being used on the residence. Any thoughts?

R. Mason

Whats the chance of all that happening?