Legal Definitions - loss payee

Definition: A loss payee is a person or entity named in an insurance policy to receive payment if the insured property suffers a loss. This is done through a loss-payable clause.

Example: Let's say you take out a car loan and the lender requires you to have car insurance. The lender will likely be named as the loss payee on your insurance policy. This means that if your car is damaged or totaled, the insurance company will pay the lender the amount owed on the loan before paying you any remaining amount.

Another example: A business may have a loan with a bank and the bank may require the business to have property insurance. The bank would be named as the loss payee on the policy. If the business's property is damaged or destroyed, the insurance company would pay the bank the amount owed on the loan before paying the business any remaining amount.

These examples illustrate how a loss payee is a person or entity that is entitled to receive payment from an insurance policy if the insured property suffers a loss. It is important to note that the loss payee is not the policyholder, but rather a third party that has a financial interest in the insured property.