Can I Cash an Auto Insurance Check Written Out to My Lien-Holder and Myself?

Following the law is a good way to avoid common fines, fees, and other consequences. When automobile insurance providers write a check for a claim; they sometimes write a check to two entities. If you have an unpaid loan against the car, you can find you have received a check made out to both you and the lienholder of the vehicle. Referred to as a “two-party” insurance check, people often have questions when they first see one. There are specific rules that apply to cash a check of this type, and financial and legal penalties can be given to people who do not follow the proper procedures. This article will explore the procedures, explain why more than one name is on the check, and give an overview of the policies and procedures you need to know. Keep in mind that each state can have different laws in regards to automobile insurance, and sometimes these laws do affect the insurance providers as well.

How Do I Cash My Insurance Check If It Is Written Out To Me & My Lien Holder?

First off, know that it is common for insurance companies to put your lender’s name, in addition to your own, on the check. The insurance provider has a legal obligation to include both of you because both parties have a financial stake in the vehicle since it has not been paid off yet. If your vehicle is completely paid off, and your coverage provider still puts your previous lender’s name on the check, that may be in error. If you still have any portion of a loan out, it forms a lien against your vehicle. This allows the lender to repossess the vehicle and sell it if you are not making payments on the car. Both parties have a share in the check you were written by the insurance company, which is why the check will be made out to both you and the bank that financed the vehicle. There are questions as to who will need to endorse the check, who will get the money, what happens if you do not want repairs, and more.

Policies And Procedures

Following proper procedures is an essential part of the process. Your name, as well as the name of the insurance provider you are utilizing, will be on the check. One of the most common questions asked in regards to this is whether or not the check needs to be endorsed and who should endorse the check. Two-party checks can be written in multiple ways. Both names will appear on the “pay to the order of” section of the check, though the word between both of the names listed on the check can be pivotal. If the word is “and,” you will need to have both yourself and the representative of the lienholder to present it for payment jointly. A valid government ID for both of you will also need to be presented.

If the word in between the two names is “or,” only one of you will need to endorse the check. You should be safe signing it yourself if there is no qualifier on the line as well. The lack of the word “and” does not specify that both parties must sign the check.

Who Gets The Money?

Regardless of whether the word “and” or “or” appears on the check, assuming that both parties signed it, the check can go into either payee’s account. If you try to cash the check, however, and it says “and,” you will likely run into problems. Getting a signature will be necessary. You can also turn the check over to them and ask the lender to make out its own check for the cost of repairs. In this case, if there are leftover funds from the claim, they are likely applied to your loan balance.