Your car was deemed totaled or damaged in an accident. Once you have finalized your auto insurance claim, you might be entitled to a reimbursement or payout. But do you get a check? How do you cash out a car insurance claim check? Does the payout go to the lending company instead?
The answers to these questions are not as clear as your vehicle damages. And different factors can complicate the payout process. In this article, you will learn how to cash out a car insurance claim check after an accident.
How do you get Paid for a Car Insurance Claim?
Just so you know how you get paid for auto insurance claims may depend on whether you claim with your insurer or another driver. And if you are the owner of the vehicle or not,
When you claim with your insurer
When you file an auto insurance claim with an insurance company, who gets the payout depends on who owns the car. Here’s how it usually works:
- If your car is fully paid off, the insurer will send the check directly to you.
- If you have a car loan, the check may have to go to your lender, but in some cases, the check could be made out to both you and the lender.
- If your car is leased, the check will go to both you and the leasing company.
However, in cases where the check is made out to either you or the leasing company, the leasing company or lender will have to sign the check before you can cash it. Generally, they will require that the car be repaired. Also, you might be asked to sign the check over to them so they can pay the repair shop directly. Or they might request proof that the repairs are done before signing the check and letting you pay the bill.
When you claim with another driver’s insurance company
When you file a claim with someone else’s insurance company, things work differently. If another driver hits your car and you claim against their liability insurance, here’s what usually happens:
- The check will be in your name. Typically, the insurance company writes the claim check to you directly.
- Loan or lease requirements: If you have a loan or lease on your car. You will be required to make use of the insurance money for repairs. State rules can affect this process.
- No deductible: You won’t have to pay a deductible when claiming through someone else’s insurance.
However, always keep in mind that the other driver’s insurance might not fully agree that their driver is at fault. This could mean they only pay part of the claim.
What Happens When a Repair Shop is Involved?
Depending on the insurer, the check may be sent straight to the repair shop. Especially the repair shop, which is a preferred shop of the auto insurer. Also, the insurance check may be made together with you and the shop. Although the insurer might recommend a repair shop to you, you have the chance to choose any repair shop of your choice. Keep in mind that the amount of money you wind up with if the vehicle gets repaired will depend on the estimated expenses to fix the car damage and the coverage limits listed in your policy, minus any deductible.
Can you Cash Out a Car Insurance claim and spend it?
If you own the vehicle fully, you can make use of the insurance claim payment any way you like. This freedom also applies if the payment comes from someone else’s insurance.
However, if your vehicle is financed or leased, the lender or leasing company will have the power to determine how you spend the payment. And it could require proof that the money was used for repairs.
If there’s any money left after the vehicle repairs, you don’t have to return it unless your policy specifically says so. Repair shops are expected to stick to the insurer’s estimate, and any leftover funds are typically insignificant.
What Happens with a Totaled Car Claim Check?
If your vehicle is deemed totaled and you have a loan or lease. The insurance company will probably issue a check to both you and the lender or leasing company. The lender or leasing company will have to take their share of the money first, and any leftover money goes to you.
Sometimes, the payout from the insurance might not cover what you still owe on the vehicle. In this case, you’ll need to pay the difference between the claim amount and the loan or lease balance. This is where gap insurance comes in. Gap insurance helps cover the remaining loan or lease balance when your vehicle is totaled and you owe more than its current value. If another driver’s insurance totals your car, you’ll need to agree with your lender or leasing company on how the money will be shared.
Insurance companies decide whether to repair or total a car based on different factors, such as the type and severity of damage and the car’s age. If you file a claim under your policy collision or comprehensive coverage, the maximum payout you will get will be the car’s value right before the accident, minus your deductible.