The party who receives insurance money when a claim is paid because they have a financial stake in the property.
A loss payee is a party designated in an insurance policy to receive insurance proceeds in the event of a covered loss, typically because they have a financial interest in the insured property. In construction, lenders financing a project are commonly listed as loss payees on the builder's risk policy so that insurance proceeds are applied to the loan rather than paid solely to the borrower. A loss payee has rights to the insurance payment but does not have the same rights as a named insured.
A bank financing a $5 million warehouse construction project is listed as loss payee on the builder's risk policy to protect its collateral.
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