Tel: 619-259-5459
Competitive Edge Insurance
  • Construction
  • Business
    • Health and Wellness Insurance
    • Cyber Liability
    • Bonding
    • General Business Insurance
    • EIDL Insurance Requirements
  • Personal Lines
    • Auto Insurance
    • Boat Insurance
    • Homeowners Insurance
  • About Us
  • Resources
    • Articles and Insights
    • Trusted Advisors
  • Contact
  • Menu Menu
  • LinkedIn
  • Instagram
  • Facebook
  • Youtube

Tag Archive for: Additional Insured

Additional Insured vs. Loss Payee: What’s the Difference?

October 9, 2022/in General Business Insurance, News

There are a lot of terminologies to keep track of in the commercial insurance world—two of them being additional insured and loss payee.

While additional insureds and loss payees are endorsements that extend insurance coverage to a third party, there are key differences in the scope of coverage provided in each.

Below, we’ll discuss the difference between an additional insured vs. a loss payee.

Additional Insured

An additional insured is a third party—either an individual or business entity—who is added to an insurance policy at the request of the named insured because they have a liability exposure in the relationship.

Typically, an additional insured would be someone who is working with the named insured on a project. For example:

  • A business partner
  • Contractor 

Insureon provides a great example: Say “the owner of an office building hires a janitorial company to clean its premises. If a visitor gets injured after tripping on a box the owner left in a hallway, the janitorial firm could be exposed to litigation.”

Therefore, “to protect itself, the janitorial company would ask the property owner to list it as an additional insured on the owner’s general liability insurance or business owner’s policy (BOP). That way, if the injured visitor sues the janitorial services company for negligence, the building owner’s insurance policy will defend the company.”

When listed as additional insured, the party is then protected under the terms of the policy just as the named insured.

Loss Payee

A loss payee, on the other hand, is a third party who is entitled to receive payment from an insurance policy in the event of a loss.

The loss payee is typically a lender (i.e. bank, mortgage company, the lender who financed the purchase of a piece of equipment insured under the policy) who has a financial interest in the property that is insured under the policy.

If that property is damaged or destroyed, the loss payee will receive compensation from the insurance policy.

Sound a little complex? Here’s a great example from Embroker:

You own a pizza restaurant (yum!) To make your delicious pizzas, you’ve rented “your pizza ovens from another company. If you add that company to your commercial property policy as a loss payee, both you and that company could receive payments if a fire breaks out in the restaurant and damages… the rented ovens.”

Why do both parties receive payments? “Because both have insured interest in the property that was affected.” It’s important to note, however, that the loss payee has first rights on insurance claim payments rather than the named insured.

A loss payee is added to a policy via a “loss payable clause,” which is typically added to a commercial auto or a commercial property insurance policy.

Key Differences: Additional Insured vs. Loss Payee

While additional insureds and loss payees are both parties who are protected under an insurance policy, the scope of coverage that each provides is quite different.

The key difference between an additional insured and a loss payee is that additional insureds receive liability protection whereas loss payees receive property damage coverage.

Additional insureds are protected in the same way as the named insured, while loss payees are only entitled to receive payment in the event of a loss.

Moreover, additional insureds are typically added to a policy at the request of the named insured, while loss payees are typically lenders who have a financial interest in the property that is insured under the policy.

When deciding whether to add an additional insured or loss payee to your policy, it’s important to understand the difference between the two so that you can choose the endorsement that properly protects your interests.

Learn More

In any project, it’s important to make sure you have the proper insurance to protect yourself and all parties involved.

A Certificate of Insurance (COI) gives a summary of what coverages someone has, whether it be general liability, workers’ compensation, or property. A COI can also include a description of coverages that might be there or attached; such as additional insured status or waivers of subrogation.

Read on for more on what you need to know about certificates of insurance.

https://compedgeins.com/wp-content/uploads/2022/09/Additional-Insured-vs.-Loss-Payee-Whats-the-Difference.png 628 1200 Brenda Jo Robyn https://compedgeins.com/wp-content/uploads/2020/11/logoweb.png Brenda Jo Robyn2022-10-09 07:00:002022-09-19 09:53:47Additional Insured vs. Loss Payee: What’s the Difference?

CATEGORIES

RECENT POSTS

  • Black and White Photo of a man writing a contractEPLI: Does Your Construction Business Need It?December 5, 2022 - 8:45 am
  • City view of commercial buildings, including skyscrapers surrounded by treesHow to COPE in an Inflationary EnvironmentNovember 28, 2022 - 9:00 am
  • graph illustrating downward trends from the recession with a calculator and pen and pencilTop Tips to Recession-Proof Your BusinessNovember 21, 2022 - 9:00 am

CONNECT WITH US

VIDEO POSTS

  • City view of commercial buildings, including skyscrapers surrounded by treesHow to COPE in an Inflationary EnvironmentNovember 28, 2022 - 9:00 am
  • Coronado bridge aerial viewGet to Know Our Founder: Her Rotary InvolvementOctober 2, 2022 - 7:00 am
  • Insurtech holographic image with man using ipadThe Coverage Pitfalls of InsurtechJuly 31, 2022 - 7:00 am
LET’S TALK

WANT TO KNOW HOW MUCH YOU COULD BE SAVING ON YOUR INSURANCE COSTS?

WANT TO KNOW HOW MUCH YOU COULD BE SAVING ON YOUR INSURANCE COSTS?

LET’S TALK

Connect With Us

Competitive Edge Insurance

LIC #0H31982

P: 619-259-5459
F: 619-377-0144

830 Orange Ave Suite L Coronado, CA 92118

Privacy Policy

Hours of Operation

Monday – Friday 8:00AM – 5:00PM

Saturday Closed

Sunday Closed

© Copyright 2021- Competitive Edge Insurance

site design by digitalstoryteller.io

© Copyright 2021- Competitive Edge Insurance
site design by digitalstoryteller.io

Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

Accept settings

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visit to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Other cookies

The following cookies are also needed - You can choose if you want to allow them:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Privacy Policy
Accept settings