A loss payee is a party named on a property policy to receive payment, jointly or directly, for loss or damage to property in which it holds a financial interest. Lenders and lessors are the usual examples. It is a property coverage concept and has no equivalent effect on a liability policy.
Updated September 2026.
Why brokers care
Loss payee and additional insured get confused because both involve adding a third party to someone else's policy. They do entirely different things. Adding a lender as additional insured on a liability policy does nothing for their security interest in the equipment, and naming them as loss payee does nothing for their liability exposure. Contracts sometimes require both, on different policies.
What to check
- Which policy the loss payee status is required on, almost always property
- Whether the contract also requires additional insured status on liability
- The exact legal name and any reference number the lender specifies
- Whether lender's loss payable wording is required rather than simple loss payee
- That the interest is recorded on the policy rather than only on the certificate
Common mistake
Confusing it with additional insured. Both add a third party to someone else's policy and they do entirely different things, on entirely different policies.
Party-naming checks are in the certificate review checklist.