Loss Payee Clause

A loss payee clause (or loss payable clause) is a clause in a contract of insurance that provides, in the event of payment being made under the policy in relation to the insured risk, that payment will be made to a third party rather than to the insured beneficiary of the policy. Lenders in project finance frequently require that insurance proceeds be paid into a compensation account – a Control Account – maintained with the agent bank for the transaction