So, you've been in a car accident and filed a claim with your insurance company. Now what? Well, when it comes to getting a claim check, things can get a little tricky. Most car insurance providers won't just hand you a check to spend however you please. Instead, they'll want to make sure the money goes towards things like repair costs, medical bills, or other expenses related to the accident. This is usually done by having another party, like a mechanic or lienholder, sign off on the check.
When would you get a car insurance claim check?
If your car insurance claim is approved, you'll likely receive a check to cover the damages (minus any deductible). A claims adjuster will evaluate the situation and determine how much compensation you should receive. The check will then be issued to you, two parties, or a lienholder, depending on the circumstances. If...
The check is made out to two parties
If your insurance company issues a check, it might be written out to both you and the approved body shop. This is to ensure the funds are used for the intended repair. If the check is written to you and the mechanic, you can cash it and use it for the repairs. Just make sure to check if the names are joined with "and" or "or" to know how to proceed.
The check is made out to a lienholder
If you get a car insurance check that has both your name and your auto loan provider's name on it, you can't just cash it on your own. You'll need to get your lender to endorse the check as well. Once the check is signed by both you and your lender, it can be used to pay off your car loan or put towards it.
If the check is for repairs instead of paying off your loan, things can get a bit more complicated. You'll have to follow these steps:
Send the check to your lender.
Get your car fixed.
Take your car to a dealership for an inspection and have them sign off on the repair.
Send the repair bill, statement from the dealer, and photos to your lender.
Wait for your lender to review everything, sign the check, and send it back to you.
Cash the check and pay the repair shop.
Can you keep a car insurance check?
The check is from a third-party claim
If the check is from another party's insurance company, you may have more flexibility in how you use the money. However, your lienholder may have specific requirements for using the funds. If your vehicle was totaled, you'll need to pay off your lender with the insurance money.
The claim check is more than the repairs
Sometimes, the check you get for repairs may be more than what you actually need. If the check is made out to you and an approved repair shop, the shop will use the money for the repairs. If there's any leftover, it's usually not much.
If you choose a different repair shop and the cost is less than the check amount, you might be able to keep the extra money. Just make sure all the repairs are done properly so you don't run into any issues later.
What are the major differences between state laws?
Each state has its own rules when it comes to insurance claims. Some states allow direct payments to the insured, while others use two-party checks to prevent fraud. It's important to know your state's laws or speak with an agent to understand how claim payments are handled in your area.