The term “Loss Payee” specifies a party, an institution, or a person that receives the insurance payment in the case of the loss of a vehicle or property they own. In the event of a loss, the payment is made under the policy concerning the insured, and it would go to the third party rather than to the beneficiary of the same.
It acts as a guard for the lender to protect it against unpaid loans. For example, suppose you have bought a car on loan and have car insurance. So, if your car would be crashed within the loan’s payment duration, the money would go to the bank from where you have taken a car loan rather than your account.
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