Interested party

What it means

An interested party is a person or entity noted on a policy because it has a financial interest in the insured property or the insured work. Financiers, lessors, principals and landlords all commonly ask to be noted.

Noting an interested party records that interest. Depending on the wording, it can mean the insurer will tell that party if the policy is cancelled, and it can mean a claim payment for the relevant property is made with that party’s interest in mind. What it usually does not do is make that party an insured with its own right to claim.

Also called: interested party, noted interested party, third party interest

Where you meet it

• Equipment finance and leasing, where the financier wants its interest in the asset recorded.
• Construction contracts, where a principal asks to be noted on contract works or liability cover.
• Commercial leases, where a landlord asks to be noted on the tenant’s policy.

Worked example

A contractor finances an excavator. The financier requires its interest to be noted on the plant and equipment policy. The broker arranges the notation and issues a certificate showing it.

If the machine is destroyed, the notation means the financier’s interest is recognised in how the claim is settled, and it will generally be told if the policy lapses. It does not by itself let the financier lodge its own claim or dictate how the claim is handled.

What goes wrong with it

• Being noted as an interested party and being named as an insured are different things with different consequences. A contract asking for one and getting the other is a common and expensive mismatch.
• A principal wanting cover in its own right is asking for a principal’s indemnity extension, not a notation.
• Notations are specific to the property or the contract. Adding one for a job does not carry over to the next job.
• Removing a notation at renewal is easy to overlook. A financier that has been paid out stays on the policy record until somebody asks for it to come off, and a stale list of interested parties can slow a claim payment while the insurer works out who still has an interest.

Covers this clause appears in

• Contract works insurance — Cover for the works under construction, materials and sometimes existing structures for the duration of a contract.
• Plant and equipment insurance — Cover for mobile plant, machinery and equipment against damage and theft, on site and in transit.

Related clauses

• principals indemnity
• certificate of currency
• waiver of subrogation

Guides that use this

• checking a subcontractors certificate
• certificate does not meet the contract

Sources

On any specific policy, the wording and the schedule govern — they are the primary source for what a clause means there. The references below are general guidance to check against, cited at the publisher level.

• Moneysmart (ASIC) — General guidance on business insurance from the regulator’s consumer site. A starting point, not a definition of this clause.