A good auto insurance policy can help drivers cover the costs of repairs, medical bills, and expenses caused by accidents on the road or other types of covered claims. Without auto insurance, drivers would be stuck paying the bill out of pocket for this type of damage, but with the right policy, drivers can usually avoid major financial loss related to a covered accident or incident by filing a claim with the insurance company. insurance.
However, the claim process can be complicated and lengthy, and you may not be sure what to do with your auto insurance claim check. Well, there are many ways a car insurance claim check can be written, and when you do get paid, handling it can take more than just taking the check to the bank. As such, you can help speed up the financial recovery process after a claim if you know how to handle each situation.
Reading: Why did my insurance send me a check
how does car insurance payment work?
Cashing insurance claim checks can be a gray area, especially since there aren’t always instructions explicitly stating how the check can be used. While there are several ways a claim check can be handled, it will generally be made out to the people primarily responsible for carrying out the repairs. This could be you, the repair shop, your lender or multiple parts, depending on your situation and your auto insurer. If you have questions about your claim check and how to handle it, talking to your insurance adjuster or claims representative might be a good first step.
the check is made out to two people
If the auto insurance claim payment came from your insurance company, you may receive a check made out to you and the approved auto body shop. auto insurers tend to write two-part checks to reduce the chances that the funds will be used for something other than the intended repair. however, the check is not always written to you and the mechanic. In some situations, such as a total loss, the check may be made out to you and your lender, known as a lien holder, and you will be expected to pay off your auto loan with the funds.
In any case, you can determine what to do with a two-part check by checking to see if the names include “and” or “or”. if “o” is present, it should be able to cash the check by itself. if the names are joined with “and”, you may need to complete the repairs at the mentioned body shop by making the check payable to them.
the check is in the name of a pledgee
If an auto insurance claim check was written out to you and your auto loan provider, you may not be able to access the funds from the check yourself. Since it includes both of your names, the check will likely need to be endorsed by both you and your lender. Once the check has been sent to your lender and has the proper signatures, it can be cashed and used to pay off your car loan.
but what if the check was for a repair instead of a loan settlement? this is where things can be very time consuming. You’ll need the lienholder (or the tenant, if it’s a lease) to sign the check, which could take weeks if sent by mail. the process typically follows these steps:
- Send the check to the lienholder.
- have the vehicle repaired.
- bring your vehicle to a dealer when the repairs are complete and have a representative inspect the repair and approve it.
- send the dealer statement, repair bill, and photos to the lien holder.
- wait for the lienholder to review your documents, sign the check, and mail it to you.
- Cash the check and pay the repair shop when you receive it.
can you keep a car insurance check?
While using your entire claim check for needed vehicle repairs is an obvious option for your payment, it’s not always the only option. However, determine if you can use your payment for other purposes It depends on some factors, mainly linked to how the check is issued.
the check is from a third party claim
You generally have the most flexibility when the claim check comes from the other responsible party’s insurance company. For example, if you were in a no-fault accident and the other driver involved’s insurance writes a check for the damages, you may be able to decide how to use that money. however, you’ll likely need to show a damage estimate before receiving any money from any auto insurance provider, so you’ll likely want to use those funds to repair your vehicle.
Please note that if you are leasing the vehicle or have a loan, your creditor may have stipulations about how the check can be used and may require proof that the damage has been repaired. and if your vehicle was totaled and you receive a check for the loss, you will be responsible for paying your lender the money owed to you to close the loan.
the claim check is more than the repairs
In some cases, your claim check may end up being more than the full cost of the necessary repairs to your vehicle. what happens to the excess funds depends on how the check is written. Sometimes your insurance company will require proof of repair, in which case the check may be made out to both you and the approved auto body repair shop up to the designated amount. the repair shop is generally expected to complete the repairs within the allocated budget; if funds remain, the difference will usually be negligible.
If you decide to go to an independent repair shop instead and the total cost of your repairs is less than the claim check made out to you, you may be able to keep the difference in most cases. however, because you cannot claim the same damage more than once, it is essential to ensure that all necessary repairs have been made. If the difference between the claim check and the repair cost is large, it may be worth double checking that your vehicle has been fully repaired in accordance with your insurer’s claim agreement.
what are the main differences between state laws?
Each state has its own insurance rules, including how claims are paid. Some states, such as Massachusetts, allow direct payment of claims to the insured in the form of a check. this money can be used to pay for repair work at a body shop of your choice. Otherwise, insurance companies often reduce claims check collection fraud by using two-party checks written to both the insured and the repair shop to ensure funds are used for claimed damages. be sure to check your state’s laws regarding insurance or consider speaking with an agent to verify how your state handles claim payments.
frequently asked questions
can I spend less than what the insurance company paid me for a car repair?
what is a two-part insurance check?
what if I don’t want to deal with an insurance check with a lien holder?
Do I have to use a claim check for auto repairs?