A good auto insurance policy can help drivers cover repair costs, medical expenses, and expenses caused by traffic accidents or other types of covered claims. Without auto insurance, drivers would be left to foot the bill out of pocket for these types of damages, but with the right policy, drivers can usually avoid significant financial loss from a covered accident or incident by filing a claim with the insurance company.
The claims process can be complicated and time-consuming, however, and you may not know what to do with your car insurance claim verification. Well, there are many ways to issue an auto insurance claim check, and when you receive a payment, handling it may require more than just taking the check to the bank. So you can help speed up the financial recovery process after a claim if you know how to handle each situation.
How does car insurance payout work?
Cashing insurance claim checks can be a gray area, especially since there aren’t always instructions that explicitly state how the check can be used. Although there are several ways to handle a claim check, it will generally be addressed to the people primarily responsible for carrying out the repairs. This could be you, the repair shop, your lender, or more than one party, depending on your situation and your car insurer. If you have questions about your claims check and how to handle it, speaking with your claims adjuster or claims representative might be a good first step.
The check is made payable to two parties
If payment for the auto insurance claim comes from your insurance company, you may receive a check in your name and that of the authorized body shop. Car insurers tend to issue two-part checks to reduce the risk that the funds will be used for something other than the scheduled repair. However, the check is not always written to you and the mechanic. In certain situations, such as a total loss, the check may be written in your name and the name of your lender, known as the lien holder, and you will need to repay your car loan with the funds.
Either way, you can figure out what to do with a two-part check by checking if the names include “and” or “or”. If “or” is present, you should be able to cash the check alone. If the names are joined by “and”, you may need to complete the repairs at the named body shop by signing the check to them.
The check is made payable to a preferred creditor
If an auto insurance claim check has been drawn up in your name and the name of your auto loan provider, you may not be able to access the funds in the check on your own. Because it includes both of your names, the check will likely need to be endorsed by you and your lender. Once the check has been sent to your lender and has the proper signatures, it can then be cashed and used to pay off your car loan.
But what if the check was for repair rather than loan repayment? This is where things can take time. You will need to have the check signed by the lien holder (or lease holder, if it is a lease), which can take weeks if processed by mail. The process generally follows these steps:
- Send the check to the lien holder.
- Have the vehicle repaired.
- Take your vehicle to a dealer when the repairs are complete and have a representative inspect the repair and sign it off.
- Send the lien holder the dealer’s statement, repair invoice and photos.
- Wait for the lien holder to review your documents, sign the check and mail it back to you.
- Cash the check and pay the repair shop when you receive it.
Can you keep a car insurance check?
While using your full claim check for necessary vehicle repairs is an obvious choice for your payment, it’s not always the only option. However, determining whether you can use your payment for other purposes depends on a few factors, primarily related to how the check is issued.
The check is from a third party claim
Generally, you have the most flexibility when the claim check comes from another responsible party’s insurance company. For example, if you were involved in a not-at-fault accident and the insurance of the other driver involved issues a check for the damage, 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 a car insurance provider, so you’ll likely want to use those funds to repair your vehicle.
Keep in mind that if you lease the vehicle or have a loan, your lien holder may have stipulations on how the check can be used and may require proof that the damage has been repaired. And if your vehicle has been totaled and you receive a check for the loss, you will be responsible for paying your lender the money owed to them to close the loan.
Claims control is more than repairs
In some cases, your claim check may end up being more than the total cost of repairs needed for your vehicle. What happens with excess funds depends on how the check is written. Sometimes your insurance company will require proof of repair, in which case the check can be made out to you and the authorized body repair shop up to the designated amount. The repair shop is generally expected to carry out the repairs according to the allotted estimate – if funds remain, the difference will usually be insignificant.
If, on the other hand, you decide to use an independent repair shop and the total cost of your repairs is less than the claim check given to you, you may be able to keep the difference in most cases. However, as you cannot claim the same damage more than once, it is essential to ensure that all necessary repairs have been carried out. If the remaining difference between the claim check and the repair cost is high, it may be worth checking that your vehicle has been fully repaired according to your insurer’s claim agreement.
What are the main differences between state laws?
Each state has its own insurance regulations, including how claims are paid. Some states, such as Massachusetts, allow claims to be paid directly to the insured in the form of a check. This money can then be used to pay for repair work at an auto body shop of their choice. Alternatively, insurance companies often reduce claim check cashing fraud by using bipartisan checks made out to both the insured and the repair facility to ensure funds are used for damages claimed. Be sure to check your state’s laws regarding insurance or consider speaking with an agent to verify how your state handles claim payments.