dcsimg
Call Us Toll Free: 1-855-430-7753
Go To Top
Get Personalized Car Insurance Quotes
Age
Currently Insured?

Is there a difference between a loss payee and a lienholder?

By

The loss payee and a lienholder may be separate entities. Or they may be both. It may sound confusing, but there’s a reason for this contradiction. 

Let’s take a look at their similarities and differences. 



What is a lienholder?

A lienholder is 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: 

  • Bank
  • Finance company
  • Credit union 
  • Another party to whom funds are owed as payment for the property

 

What is a loss payee?

A loss payee is a person or entity with a legally secured insurable interest in another's property. This is 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 your policy’s loss payee.

Examples of a loss payee:

  • Vehicle co-owner or-co signer 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 financial institution like a bank or a finance company who loaned the funds for the purchase

  

Comparing lienholder vs. loss payee

Here’s the difference -- the loss payee doesn’t have to own the property.  They simply have an insurable interest in it. A lienholder owns the property until the property is paid off. 

For this reason, a lienholder may also be considered a loss payee. Be sure to list a loss payee on your car insurance policy if there’s a lienholder or an insurable interest on your vehicle.

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 that you carry physical damage coverage of collision and comprehensive.  

The best way to make sure that you receive the best rates is to compare car insurance rates with multiple insurance providers.

Leave a Comment
Ask a Question
Comments
Tell us your thoughts
Leave a Comment
 

1 Responses to "Is there a difference between a loss payee and a lienholder?"
  1. Ericka

    Although only named above for ex. of a lien holder, I believe a credit union can also be a loss payee. Difference is "lien holder owns the property until payment for the property has been made in total."

      Reply»  
Disclaimer: Answers and comments provided are for information purposes. They are not intended to substitute informed professional advice. These responses should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. Please refer to your insurance policy for specific coverage and exclusion information. Please read our Terms of Service.

Ask Your Question Now

question-mark

Penny will do whatever research it takes to find your answer ASAP.