A loss payee is one of the more understandable terms concerning insurance policies. It is often tied to automobile insurance and commercial or residential property insurance. Payment or loss of claim is made before it is released to the named insured. It automatically includes the mortgagee of the insurance policy.
For example, when you purchase a residence, and you pay the mortgage of the home, the bank lends you money, and there is an accidental fire, and you file a claim for the damage, the loss payee would pay you and the bank an equal amount. A mortgagee is a person that initiates and keeps a mortgage loan on a promissory note, which is called “holding the paper.” Mortgage lenders and banks are examples of mortgagee.
The mortgagee is the company that lends you the money. All mortgages in an insurance policy are counted as loss payee because of the claim payment is rendered to both the named Insured and listed mortgagee.
Some people tend to become confused with a loss payee and a mortgagee because they seem to be the same. When you say loss payee, this is someone who will always be placed in the insurance documents. This means that if there are some damages or losses that will happen, the person will be contacted.
When you say mortgagee, this is the person who will be provided with a loan by their chosen lender. There are various lenders that people can get a mortgage from. There are times when the person who will be listed as the loss payee and the mortgagee are the same. Yet remember that this is not always the case.
A loss payee is known to be someone who will be listed in the documents as someone who will be contacted if there are going to be some damages to the properties that have been insured or if in case something gets lost.
A mortgagee is going to be the person to whom the loan will be lent to. This means that when you are a mortgagee, you are going to get the money that you can use in order to purchase the property that you want.
There are instances when people refer to the loss payee and the mortgagee as the same but remember that this is not always the case. There will be times when these two terms will be distinctly different.