Glossary

Loss payee

The lender or leasing company named on your auto policy to receive claim payments for the car, alone or jointly with you, until the loan is paid off.

Also called: loss payee clause, lender loss payee

A loss payee is a party, usually the bank, credit union or leasing company that financed your car, named on your policy to receive payment for damage to the vehicle. The loss payee is listed on the declarations page, and the insurer sends physical damage payments to it, usually jointly with you.

Lenders require the listing because the car is their collateral. When the car is repaired, the claim check is often made out to both you and the lienholder, so the lender can confirm the money goes to repairs. When it is a total loss, the insurer pays the lender first, up to the payoff amount, and sends you anything left. Example: the car's settlement is $18,000 and you owe $15,000. The lender receives $15,000 and you receive $3,000; if you owed $20,000, the lender would receive the full $18,000 and you would still owe $2,000 unless you had gap insurance (hypothetical figures).

Many lenders ask to be named under a "lender's loss payable" endorsement, which can protect their interest even if you violate the policy. A loss payee is not an additional insured and has no liability coverage. When you pay off the loan, ask your insurer to remove the loss payee so future claim checks come to you alone.

Last reviewed October 4, 2026

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Related terms

Lienholder The bank, credit union or finance company with a legal claim on a financed car until the loan is paid off, usually named on the insurance policy. Loan/lease payoff coverage Optional coverage that pays part of what you still owe on a financed or leased car if it is totaled or stolen and the payout falls short of the loan. Gap insurance Pays the difference between a totaled car's actual cash value and the larger balance still owed on its loan or lease. Total loss A car so badly damaged that repairs would cost more than it is worth, or more than a state threshold, so the insurer pays its value instead. Declarations page The summary page of an auto policy listing who and what is insured, the coverages, limits, deductibles, premium and policy period.

Related guides

How to read your car insurance declarations page A line-by-line guide to the declarations page: drivers, vehicles, coverages, limits, deductibles, premiums and endorsements, plus the errors to catch. Insurance requirements for a financed car Why lenders require collision and comprehensive, how the lienholder is listed, what force-placed insurance costs, and what changes after payoff. Insuring a leased car What leasing companies require (collision, comprehensive, higher liability limits, gap), how the lessor is listed, and what happens in a total loss. Insuring a new car: what to do before you drive off the lot How existing policies cover a newly bought car, the grace period to add it, what lenders require, and the coverage choices to make before you sign. What happens if your car is totaled and you still owe money How a total-loss payment is split with your lender, what happens when you owe more than the car is worth, and how gap and loan payoff coverage help.