How to check the cashing of a car insurance claim – Forbes Advisor

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Your car has been damaged or destroyed in an accident. Once your auto insurance claim is finalized, you may be entitled to a payment. But how does it work? Do you receive a check? Does the payment go to your lender instead? Can you spend extra money that won’t be used to repair or replace your car?

The answers to these questions are probably not as obvious as the damage to your vehicle. Several factors can complicate the process. Here’s what cashing a car insurance claim check after an accident entails.

Related: How to make a car insurance claim

How do you get paid for an auto insurance claim?

How you get paid for an insurance claim may depend on whether you’re making a claim with your own insurance company or another driver, and whether or not you own your car.

When you file a claim with your insurance company

A payment from an auto insurance claim that you file with your insurer typically goes to the person or entity that owns the vehicle, says Mark Friedlander, spokesperson for the Insurance Information Institute, backed by the ‘industry.

If you are financing your car, it is common for the lender to require you to list them on your auto insurance policy, which means they will also be named on claim checks.

Here are three scenarios:

  • If your car is reimbursed, the insurer normally sends the insurance claim check directly to you as the owner.
  • If you still owe money on a car loan, the lender will most likely receive the insurance check, but in some cases the check may be made payable to you and the lender.
  • If the car is leased, the claim payment is yours and the leasing company’s.

In cases where the check is made out to you and a leasing or finance company, Friedlander advises that the leasing company or lender will need to endorse the check before you cash it.

Usually, the lender or leasing company will ask you to repair the vehicle, and may even ask you to sign the check and allow them to pay the body shop directly. Or they may ask you to prove with photos or other documents that the car is repaired, then sign the check and send it to you to pay the bill.

When you make a claim with someone else’s insurance company

The insurance claim reimbursement situation differs if the payment is from another driver’s insurance company. This can happen, for example, if another driver hits you and you file a claim against their motor vehicle liability insurance.

If you make a claim against someone else’s auto insurance, the claim check will usually only be written out to you, says Friedlander. But if you have a loan or lease, you may have to spend the insurance money on repairs. State regulations can play a role in how payment is handled, according to Friedlander.

You will not be required to pay a deductible if you make a claim with the other driver’s insurance company. But here’s something to consider: the other insurance company may not agree that their driver is 100% entirely responsible. This means that the insurance company can only pay part of your claim.

Related: Comparative Negligence Laws in Auto Insurance Claims

Summary: Who gets a car insurance claim check?

What happens when a repair shop is involved?

Depending on the insurance company, your claim check may be sent directly to the repair shop, especially if the shop is a preferred shop of your auto insurance company, Friedlander says. The insurance check can also be issued jointly by you and the repair shop.

Although the insurer may recommend a repair shop, you can choose the repair shop of your choice.

The amount of money you will end up with if your car is repaired will be based on the estimated cost to repair the damage and the coverage limits outlined in your policy, minus any applicable deductible.

Can you cash an auto insurance claim check and spend it?

If you own your car, which means you don’t owe money to a lender or leasing company, you can spend an insurance claim payment however you want, according to Friedlander. . This is also usually the case if the payment comes from another driver’s insurance company.

But if you have a loan or lease on the car, the lender or leasing company may restrict how the payment can be spent and may even require proof that the money was spent on repairs, Friedlander says. .

If there’s any insurance money left over after repairs, you don’t normally need to return the excess unless otherwise specified in your auto insurance policy, says Friedlander.

“The repair shop is generally expected to carry out the repairs according to the insurer’s estimate. If funds remain, the difference is usually insignificant,” he notes.

What happens with a claim check for a totaled car?

If an insurer totals your car and you have a loan or lease, the insurer will likely send a claim check to you and the lender or leasing company, Friedlander says. In most cases, the lender or leasing company will take their cut first, with any excess going to you.

Be aware that you may owe the lender or leasing company more money than the claim amount. In this situation, you need to find the difference between the claim payment and the loan or lease balance, according to Friedlander. If you have gap insurance, it will cover the balance you have on a loan or lease when your car is depleted and you owe more than its value.

If payment for a claim for a totaled car comes from another driver’s insurance company, you’ll need to work out the details of how the money is distributed with your lender or leasing company, he adds. .

An insurer looks at factors such as the type of damage, the severity of the damage and the age of the car before deciding whether the vehicle should be repaired or declared a total loss. If you made a claim under your collision or comprehensive coverage, the maximum your insurance company would pay for your total car is the value of the car immediately before the accident, minus your deductible amount.

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