A loss payee and a lienholder are people or companies with a financial stake in your vehicle. In many cases, they are the same. The loss payee or lienholder is named on your insurance policy because if the car is a total loss, some portion of the claim payout belongs to them.

Read on to learn what each term means and how they differ. 

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Written by:
Laura Longero
Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
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What is a lienholder?

A lienholder is a person or organization that has provided a loan for a major purchase and is still owed money on that loan. In the event of a total loss on a car, the portion of the loan still owed would be paid to the lienholder.

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 (or a lienholder, which is why they are often the same). The car is the collateral. Loss payments will be made to you and the loss payee listed on the policy if it’s totaled in an accident.

The loss payee may also be someone who co-signed on the car loan.

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 that loaned the funds for the purchase

  

Lienholder vs. loss payee: What’s the difference?

The main difference is that the loss payee doesn’t have to have an ownership stake in the property.  They have an insurable interest in it. A lienholder owns the property until the loan is paid off. 

A lienholder may also be considered a loss payee and will require that it be listed on the insurance policy as part of the loan agreement.

When you finance or lease a vehicle, you must also carry specific types of car insurance beyond the minimum liability limits required by your state. Your lienholder or leasing company will require that you have physical damage coverage of collision and comprehensive.

Review the terms of your loan to ensure you’re meeting all the requirements.

Laura Longero

Ask the Insurance Expert

Laura Longero

Executive Editor

Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.

John McCormick

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John McCormick

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John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.

Leslie Kasperowicz

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Leslie Kasperowicz

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Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.

Nupur Gambhir

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Nupur Gambhir

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Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.

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Executive Editor

Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.