If an entitiy is shown as an “additional insured” on an ACORD certificate of liability insurance, is there a need for the entity to be a “loss payee?”
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UPDATED: Feb 2, 2011
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Insurance Question from Bothell, WA
Asked on 02/02/2011
If an entitiy is shown as an “additional insured” on an ACORD certificate of liability insurance, is there a need for the entity to be a “loss payee?” Would there be any advantage for an entity to be listed as an "additional insured" and as a "loss payee" on a liability insurance policy? Does being listed as an additional insured offer greater protection or coverage than being shown as a loss payee?
Answer given on February 02, 2011
Additional insured and loss payee are totally different entities. As additional insured, you are being protected on a liability basis. For loss payee it is protection for property. It is rare that someone or some business would want to be listed as both for the same business/exposure.
Loss Payee is generally used for loans on vehicles and is sometimes a term used for real property, such as a mortgagee on residential or business property.
The additional insured endorsement is used for someone who is exposed on a liability basis due to the fact they may hire someone to do a job that could incur a liability loss. An example may be a contractor or tree service. The company hiring them to do the job, may ask to be an additional insured. Also, sometimes if a company is using a franchise name, the main company may ask to be an additional insured to protect them if something is done that creates a liability exposure to the franchise.
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