Transcript
The term “loss payee,” can be confused with “additional insured.” Basically, a loss payee is to property insurance what an additional insured is to liability insurance.
In this video I am going to briefly show you the differences between a loss payee and additional insured.
What Is a Loss Payee?
A loss payee is the party or entity that gets paid first in the event of a loss connected with a property in which it has a financial interest. This property is often held or used by someone other than the person who is named as the loss payee. A lender, a buyer, a lessor, a property owner or some other third party could be named as a loss payee.
An additional insured is a third party that has liability exposure in a professional business relationship. Being named as an "Additional Insured" helps transfer the risk away from your company. Property owners, landlords, general contractors, and vendors are some examples of entities that could request to be named as an additional insured.
An example of a loss payee is when a lender finances a commercial property and some business equipment. If a tenant is insuring the property or structure itself, the lender has a financial interest at stake and should be listed as a loss payee on the property policy.
Let's imagine the building burns down and the equipment was destroyed. If the lender is named as a loss payee they will have first rights to the insurance claim payment, before the insured tenant.
Both loss payees and additional insureds are able to receive insurance benefits along with the named insured, but additional insureds receive only extended insurance coverage to provide protection in the event of an insurance claim. A “Loss Payee” has a legal right to collect payment in the event of a claim.
Thanks for watching.
