The loss payee is a PERSON or institution (Bank) that receives the insurance payment on the loss of the property or vehicle you own. It is a legal definition used to cover the investment of other parties or bank that is owned by you. For EXAMPLE, you have a car on loan, and also you have insurance for that car. Now you met an ACCIDENT, and your car is a total loss(meaning completely DAMAGED beyond repair). Your bank still owes money from you in such case when you CLAIM the insurance; the insurance company will pay money directly to Bank or person you owes money. Here bank is a loss payee.

The loss payee is a person or institution (Bank) that receives the insurance payment on the loss of the property or vehicle you own. It is a legal definition used to cover the investment of other parties or bank that is owned by you. For example, you have a car on loan, and also you have insurance for that car. Now you met an accident, and your car is a total loss(meaning completely damaged beyond repair). Your bank still owes money from you in such case when you claim the insurance; the insurance company will pay money directly to Bank or person you owes money. Here bank is a loss payee.