What is a Loss Payee & What do You Need to Know?
Understanding the term loss payee is important for your business when it comes to having the right insurance policies in place. This holds for businesses running at high risk with multiple insurance policies and lots of people relying on these policies.
In this post, we will explain what a loss payee is and answer some of the most common questions insureds have about loss payees in their insurance policies.
What is a Loss Payee?
According to IRMI, a loss payee is “a person or entity that is entitled to all or part of the insurance proceeds in connection with the covered property in which it has an interest.”
Loss payees are individuals on an insurance policy who receive payment when there is a loss. These people receive payment in the case of a loss; because they have some personal stake in the item that is insured.
It is most common to see loss payees listed in auto and real-estate policies, but it’s possible to incorporate them into almost any insurance policy.
What if there is More Than One Loss Payee?
If a policy lists more than one loss payee, there is an order to follow in which beneficiaries receive payment. For example, the person who has the most to lose is the first loss payee and is the first to receive a payment if there is a loss.
If there is only one loss payee on a policy, this is the person who receives payment first.
Can a Loss Payee Make a Claim?
As with most insurance policies, the named insured handles filing a claim. When an insurance policy includes a loss payee, they have a right to file a claim if the named insured does not within a reasonable time.
Who Should be Listed as a Loss Payee?
Whoever is entitled to reimbursement in the case of a loss should be listed as a loss payee.
For example, if you take out a loan, your lender should be listed. But, if you buy something outright and insurance is involved, you do not need to list anybody on the policy.
When somebody is listed as a loss payee on an insurance policy, they receive notice of a policy’s status regularly. Some things loss payees receive notification about include the following:
- When they are added to the policy.
- Any changes made to the policy.
- Overdue payments.
- Cancellation of the policy.
What Software Can I Use to Track Insurance Policies & Consolidate Compliance Management?
Keeping track of insurance policies is a lot of work, so SmartCompliance wants to offer you a free product demo.
This demo will show you how our software will help you track all your insurance policies and consolidate your compliance management efforts into one software.
