when financing a vehicle purchase a buyer must agree to carry insurance on the secured property otherwise forced placed insurance becomes a possibility the financial institution making the loan typically insists that they are indicated as the loss payee on the insurance policy to protect themselves against loss 
for example the loss payee section is a section on an auto insurance policy that lists your lender s name and address on the given collateral it is important to give the correct address for your lender as some insurance companies have multiple addresses the term loss payee is most often used in the auto insurance industry but is also used by other insurance sectors 1the lender will usually require verification of insurance coverage and the loss payee should be added as soon as you buy insurance for the covered vehicle this verification of insurance cannot be satisfied simply by an insurance id card it needs to be a declarations page the declarations page will have multiple pieces of crucial information listed for your lender explaining loss payee status