What's the difference between Additional Insured vs. Loss Payee?

Insurance is oftentimes mandated by another party requiring you to buy an insurance policy listing the party on the policy. However, how should you list this organization on your insurance policy and what are the implications of doing so? Let's explore!

Don't get blindsided by an incorrectly written policy: ensure that you and your stakeholders are protected.

The following information is a general guideline as to the type of coverage required; speak with a trusted insurance adviser in order to confirm coverage.

Before we jump into the Blog's title question, we'll have to define the primary stakeholder: the named insured.

Named Insured

This is the individual or organization that owns the insurance policy. As such, the 'named insured' can cancel, change, receive refund, pay premium, and file claims on the policy. A qualifying criteria of the named insured: primary insurable interest in the entity being insured.

Additional Insured

An 'Additional Insured' clause affords liability coverage to a party other than the named insured. This is oftentimes requested by clients of the named insured in order to cover for the liability exposure associated with named insured's products or services.

Loss Payee

An 'Additional Insured' clause affords property coverage to a party other than the named insured. This is regularly requested by mortgagees of the house, office, car, boat, etc. to ensure that the loan provider will have a hand in the repairs or replacement of property in the event of a loss.

Fenix Risk Management is an independent insurance agency proudly serving families & businesses in Georgia, Alabama, North Carolina, South Carolina, Tennessee, and Florida.

Simmy is an adviser at Fenix Risk Management.

Note: the opinions expressed in this blog are that of the author, not of any other individual or organization referenced.