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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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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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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