What it does
BP 12 03 lets the policy name a party with a financial interest in covered property and decide how that party is paid. ISO describes the options as naming a loss payee, a lender's loss payee, a loss payee under a contract-of-sale arrangement, or a building owner loss payee.
Who needs it
Insureds who finance or lease equipment, furniture or fixtures; buyers or sellers under a contract of sale; tenants whose lease requires the landlord to be paid for improvements or the building. Mortgagees on owned buildings are normally shown on the Declarations instead.
Key provisions
- The Schedule identifies the property and the payee, and which loss payable option applies.
- Under the lender's loss payable option, covered loss is paid to each loss payee in order of precedence as interests may appear, and the payee can receive loss payment even if it has started foreclosure.
Quoting and selling notes
- Use the exact name and address from the finance or lease agreement and identify the specific property.
- A loss payee is not an additional insured; liability requests need a separate endorsement such as BP 04 16 or BP 04 02.
- Washington and Minnesota use state versions.
Related forms
BP DS 01; BP 04 09 Additional Insured – Mortgagee, Assignee or Receiver.
