Understanding Insurance - Loss Payee vs. Additional Insured
2 Replies
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
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.
Lisa Eckman
Lender
replied 11 months ago
@Jason Bott Thank you SO MUCH! That’s very helpful. I appreciate the examples.