Is there a difference between a loss payee and a lienholder?
No, not really. Based on the following definitions taken from the CarInsurance.com web site you will see that the two terms are very similar. The loss payee and a lienholder may be separate entities or they may be both. To explain this let us look at each.
Loss Payee . A person or entity with a legally secured insurable interest in another's property, usually a financial institution that loaned money to buy a car. The car is the loan collateral. If the auto is damaged in an accident, loss payments will be made to you and to the loss payee on your policy.
Examples of a loss payee can be a co owner or co signer on a vehicle who has an insurable interest in the property, an individual with whom a financial agreement has been made securing the property as collateral such as a personal sale or a temporary personal loan. A loss payee can also be a financial institution like a bank or finance company who loaned the funds for the purchase.
Lien holder . A person or organization with a financial
interest in property up to the amount of money borrowed or still owed on the property.
Examples of a lienholder would be a bank, finance company, credit union or other party to whom funds are owed as payment for the property
The difference is such, the loss payee does not have to own the property they simply have an insurable interest in it. A lienholder owns the property until payment for the property has been made in total. For this reason, a lienholder may also be considered a loss payee. If there is a loss payee, a lienholder, or an insurable interest on your vehicle please be sure to list them on your car insurance policy.
When you finance or lease a vehicle you will be required to carry types of car insurance other than the minimum liability limits required by your state. Your lienholder or leasing company will require you carry physical damage coverages of collision and comprehensive as well. The best way to make sure that you receive the best rates is to compare car insurance rates with multiple insurance providers.Source: www.carinsurance.com