The Differences Between Loss Payee & Additional Insured

Loss Payee

A loss payee is a third party individual, or company that is listed on an insurance policy declaration page. In insurance, a loss payee has a legal right to compensation first in the event of a property loss or claim. The reason a loss payee receives first compensation is that they have an insurable interest in the property.

Additional Insured

Additional insured refers to anyone other than the policyholder who is covered by an insurance policy. An example of this in the real estate space is a property management company that is operating on behalf of a landlord. A property manager has an increased level of legal liability as a result of working on the landlord's property - as such, it is prudent to be listed as an additional insured.

Difference between a loss payee and additional insured

1. The named insured and additional insureds are both eligible to receive insurance benefits; however, only the additional insured is eligible to receive liability protection.

2. A loss payee, on the other hand, is covered for property damage.

3. Loss payees must legally be notified when the policyholder files a damage claim. When the insurer issues a check to cover repair expenses, it is made out to both the named insured and the loss payee.


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