Lenders & Contracts · Insurance Term
Loss Payee
Definition
A loss payee is a person or company, usually a lender or lessor, named on a property policy to receive claim payments for specific property along with the owner. It protects their financial interest in property they financed or own, such as equipment.
In Plain English
If a lender financed your equipment, it wants to be sure insurance money goes toward its loan if the equipment is destroyed. Naming it as a loss payee usually means the claim check is made out to both you and the lender. The details are set by an endorsement, commonly the CP 12 18 Loss Payable Provisions.
A basic loss payee often has no greater rights than you do. If your claim is denied, the loss payee may get nothing too. A lender's loss payable endorsement gives the lender stronger rights, similar to a mortgagee clause used for real estate loans.
Loss payees are different from a certificate holder, who only receives a certificate as proof of coverage. Loss payee status is an actual change to the policy. Proof is commonly sent on an ACORD 28 or certificate.
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Example
Hypothetical: a gas station owner leases a $150,000 fuel dispenser system, and the leasing company requires loss payee status. A vehicle crashes into the dispensers. The insurer may issue the claim payment to both the owner and the leasing company.
What to Watch For
- Confirm whether each lender or lessor wants loss payee, lender's loss payable or mortgagee status.
- Make sure the loss payee is tied to the correct property or equipment.
- Remove loss payees after the loan or lease ends to avoid delays on future claims.
- Expect claim checks to require more than one endorsement.
Common Questions
What is the difference between a loss payee and a mortgagee?
Mortgagee is generally used for a lender on real estate and comes with stronger rights. Loss payee is often used for equipment and personal property and, in its basic form, gives fewer rights.
Is a certificate holder the same as a loss payee?
No. A certificate holder only receives proof of insurance. A loss payee is added to the policy itself and has a claim to payments.
Last updated October 14, 2026 · Primesure editorial team · How We Write