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ForumsArrowPrivate Lending & Conventional Mortgage AdviceArrowUnderstanding Insurance - Loss Payee vs. Additional Insured
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Understanding Insurance - Loss Payee vs. Additional Insured

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Check Rosette Top Subject:
Maintenance
  • Posts 115
  • Votes 29

Lisa Eckman
Lender

posted 11 months ago

I was wondering if someone could explain the difference to me with regard to being named as the Loss Payee and/or Additional Insured.  What does each do, and how are they different.  I'm specifically asking in terms of being the lender on a property purchase/flip.  TIA

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  • Posts 2.0K
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Jason Bott
Insurance Agent from Milwaukee, WI

replied 11 months ago

@Lisa Eckman as it pertains to your situation,

*Loss Payee will put you in a position to receive the Property Damage claim payout if your client decides to not repair a building and walk away.  

Example:  The property you hold the note on has a massive fire and your client decides not to repair the damage, but walk away.  Before your client gets the $, your position as Loss Payee needs to be fulfilled.  Your client would get the balance of the claim pay out.

*Additional Insured allows you to be added to your clients General Liability policy.  

Example:  If there is a lawsuit against the property and you are named, your clients policy would defend you in court as an "Additional Insured of the policy".

Hope that helps.

 

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Check Rosette Top Subject:
Maintenance
  • Posts 115
  • Votes 29

Lisa Eckman
Lender

replied 11 months ago

@Jason Bott Thank you SO MUCH! That’s very helpful. I appreciate the examples.

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