How to Cash Insurance Check with Lienholder (Best Tips)

How to Cash Insurance Check with Lienholder

Have you ever asked yourself or your friend how to cash an insurance check with Lienholder? Well, you are at the perfect place to find the answer to such a question.

Understanding how to deal with insurance checks when you have a lienholder is complex. It’s rare for it to come with bona fide instructions.

Here below you can find the steps you need to take to cash insurance check with lienholder which included:

1.         Send the check to your lienholder.

2.         Get your vehicle repaired.

3.         Take your vehicle to a dealership.

4.         Send the statement, photos to your lienholder.

5.         Lienholder process the documents.

6.         Cash the check and pay for the repair.

How Do Car Insurance Payouts Work?

Cashing insurance checks can be confusing. Truthfully, there are numerous ways to handle them. However, they’re typically made out to those responsible for ensuring repairs (you, lender, multiple parties, repair shop, etc.).

If you have questions about handling your claim, it’s wise to talk things through with your insurance adjuster or representative first.

With that said, let’s look at the two most common ways an insurance check is made out — the lienholder and two parties.

Check Made Out to You and a Lienholder

If someone writes the claim check to you and an auto loan provider, it’s likely you can’t access the funds by yourself.

Why? Because it displays both names, both you and your lienholder need to endorse it. After they’ve received the correct signatures, the check can be cashed and used to repay the car loan.

More issues arise when the check is for a repair rather than a payoff.

In this case, you must get your lienholder to sign the check. Often, it takes weeks to clear, but the basic process runs like this:

  1.  Send the check to your lienholder.
  2. Get your vehicle repaired.
  3. Take your vehicle to a dealership once it’s fixed and request a repair sign-off.
  4. Send the statement, photos, and repair bill to your lienholder.
  5. Wait for your lienholder to process the documents, sign the check, and send it back to you.
  6. Cash the check and pay for the repair. 

What Happens If You Don’t Want to Deal With an Insurance Check with a Lienholder?

Sadly, there isn’t much you can do at this point. If you have a lienholder — i.e., you don’t fully own the vehicle — you’ll find it impossible to convince your insurer to pay the check directly to you.

The only way to ensure a claim check is made out solely to you is to pay off your vehicle and no longer have a lienholder.

Read also: Is Car Insurance a Waste of Money? (The Truth – Nobody Is Talking About!)

Check Made Out to Two Parties

In some cases, insurers make a claim check out to you and the repair shop. Providers like to issue two-party checks to decrease the risk you are using the funds for something else.

The way to handle the check depends on the word used between your names — “and” or “or.”

If it states “or,” then cashing the check alone shouldn’t be a problem. If it says “and,” you typically need to sign the check to the repair shop.

Can You Keep Your Insurance Claim Check?

Using the entire claim for the repairs is the obvious option. But that doesn’t mean it’s the only one, depending on how the check is issued:

  • Third-Party Claim — You get the most flexibility here. Although, you generally have to provide an estimate for the damages before you get the money.
  • Check is More Than Repairs — If the repairs made amounted to a figure significantly lower than the estimate, it’s worth checking whether everything is fixed. Any leftover funds should be minimal, allowing you to use them.

Read also: How Much Does Car Insurance Go Down After 1 Year with No Claims?

State Laws and Cashing Insurance Checks

Insurance rates are handled at a state level, and so are the laws surrounding cashing claim checks. Below, you can find each state alongside the specific insurance Statutes and Codes:

  • Alabama — 2012 Code of Alabama Title 32 MOTOR VEHICLES AND TRAFFIC Chapter 7A § 32-7A-7
  • Alaska — AlaskaUSA Federal Credit Union
  • Arizona — 2005 Arizona Revised Statutes § 44-1362 Check cashing; receipts; notices; government payment instruments; enforcements
  • Arkansas — 031-00-00 Ark. Code R. §1
  • California — California Department of Insurance
  • Colorado — Colorado Revised Statutes Title 10. Insurance § 10-4-110.8
  • Connecticut — Connecticut General Statutes Title 36A. The Banking Law of Connecticut § 36a-584
  • Delaware — Office of the State Bank Commissioner Cashing of Checks
  • Florida — The 2021 Florida Statutes Chapter 560 § 310
  • Georgia — Department of Revenue Insurance
  • Hawaii — The Senate Thirtieth Legislature, 2019 State of Hawaii Section 1
  • Idaho — Idaho Statutes Title 26 Banks and Banking
  • Illinois — Illinois Compiled Statutes INSURANCE (215 ILCS 5/) Illinois Insurance Code
  • Indiana — Indiana Code Title 28 Financial Article 8 Chapter 5 CASHING CHECKS
  • Iowa — Iowa Legal Aid Insurance Issues
  • Kansas — Kansas Statutes Chapter 40 INSURANCE
  • Kentucky — 2013 Kentucky Revised Statutes CHAPTER 304 – INSURANCE CODE
  • Louisiana — 2011 Louisiana Laws Revised Statutes TITLE 22 Insurance
  • Maine — 2014 Maine Revised Statutes TITLE 24-A: MAINE INSURANCE CODE
  • Maryland — 2013 Maryland Code INSURANCE
  • Massachusetts — 2006 Massachusetts Code CHAPTER 175 INSURANCE
  • Michigan — 2006 Michigan Compiled Laws CHAPTER 31 MOTOR VEHICLE PERSONAL AND PROPERTY PROTECTION Act 218 of 1956
  • Minnesota — 2010 Minnesota Code Chapters 59A – 79A Insurance
  • Mississippi — 2010 Mississippi Code TITLE 83 INSURANCE
  • Missouri — 2011 Missouri Revised Statutes Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS Chapter 375
  • Montana — 2011 Montana Code Annotated TITLE 33. INSURANCE AND INSURANCE COMPANIES
  • Nebraska — 2009 Nebraska Code Chapter 44 INSURANCE
  • Nevada — 2010 Nevada Code TITLE 57 INSURANCE
  • New Hampshire — 2006 New Hampshire Statutes TITLE XXXVII INSURANCE 
  • New Jersey — 2013 New Jersey Revised Statutes Title 17B INSURANCE
  • New Mexico — 2016 New Mexico Statutes Chapter 59A Insurance Code
  • New York — 2010 New York Code Insurance
  • North Carolina — 2005 North Carolina Code Chapter 58 Insurance
  • North Dakota — 2013 North Dakota Century Code Title 26.1 Insurance
  • Ohio — 2006 Ohio Revised Code TITLE 39 XXXIX Insurance
  • Oklahoma — 2014 Oklahoma Statutes Title 36 Insurance
  • Oregon — 2015 Oregon Revised Statutes  Volume 16 Chapter 742
  • Pennsylvania — 2019 Pennsylvania Consolidated Statutes Title 40
  • Rhode Island — 2013 Rhode Island General Laws Title 27
  • South Carolina — 2020 South Carolina Code of Laws Title 38
  • South Dakota — 2013 South Dakota Codified Laws Title 58
  • Tennessee — 2010 Tennessee Code Title 56
  • Texas — 2005 Texas Insurance Code 
  • Utah — 2012 Utah Code Title 31A
  • Vermont — 2014 Vermont Statutes Title 8
  • Virginia — 2010 Code of Virginia Title 38.2
  • Washington — 2015 Revised Code of Washington Title 48
  • West Virginia — 2005 West Virginia Code Chapter 33
  • Wisconsin — 2020 Wisconsin Statutes ; Annotations Chapter 600
  • Wyoming — 2011 Wyoming Statutes Title 26

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Marissa K.

Hi! I'm Marissa. A personal finance nerd, content writer, and Managing Editor. I'm here to bring you all the latest cool ways to save, make and invest extra money. So, helping you to live your dream life!

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