noun
loss payee
In plain English
A lender or lessor named on the policy to be paid first on a property loss, ahead of the insured.
Your auto lender is the loss payee on your auto policy — if you total the car, the check is made out to them first. Once the loan is paid off, they're removed and you're back as the only payee.
What it covers
Nothing additional — loss payee status simply directs payment of property loss proceeds to the named party first, up to their financial interest.
What it does not cover
Don't confuse with mortgagee (real estate) or additional insured (liability). All three are different roles with different rights.
Where it trips people up
Equipment leases often require loss-payee status. Failing to add the lessor can put the lessee in technical default of the lease — even if no loss has happened.
The technical version
A party named in the policy as an entity to whom loss payments are made, typically a creditor, lessor, or lienholder with a financial interest in the insured property.