Your car was damaged or totaled in a crash. Once your auto insurance claim is finalized, you may be entitled to a payment. but how does this work? do you get a check? Does the payment go to your lender instead? Can you spend extra money that isn’t going to repair or replace your car?
The answers to those questions are probably not as obvious as the damage to your vehicle. Several factors can complicate the process. here’s what it takes to cash a car insurance claim check after an accident.
related: how to make a car insurance claim
how do you get paid for a car insurance claim?
How you get paid for an insurance claim can depend on whether you file a claim with your own insurance company or another driver’s, and whether or not you own your car.
when you file a claim with your insurance company
A payment on an auto insurance claim you file with your insurer typically goes to the person or entity that owns the vehicle, says mark friedlander, spokesman for the industry-backed insurance information institute.
If you finance your car, it’s common for the lender to require you to list them on your auto insurance policy, which means they’ll also be mentioned on claim checks.
here are three scenarios:
- If your car is paid for, the insurer typically 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 written to both you and the lender.
- If the car is leased, the claim payment goes to you and the leasing company.
In cases where the check is made out to you and to a finance or leasing company, friedlander says the leasing company or lender will need to endorse the check before cashing it.
See also: How to Get Car Insurance in 7 Steps
Usually the lender or leasing company will ask you to fix the vehicle and may even ask you to sign the check out to them and allow them to pay the body shop directly. or they may ask you to show proof through photos or other documentation that the car is repaired, and then sign the check and send it to you to pay the bill.
when you file a claim with someone else’s insurance company
The insurance claim payment situation differs if the payment comes from another driver’s insurance company. This can happen, for example, if another driver hits you and files a claim against their liability insurance.
If you make a claim against someone else’s car insurance, the claim check will usually be made out to you only, Friedlander says. 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 file a claim through the other driver’s insurance company. But here’s something to consider: The other insurance company may not agree that your driver is 100% at fault. that means the insurance company can only pay part of your claim.
Related: Comparative Negligence Laws in Auto Insurance Claims
summary: who gets a car insurance claims check?
what about when it comes to a repair shop?
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 made out jointly to you and the repair shop.
Although the insurer may recommend a repair shop, you can choose any repair shop you like.
The amount of money you’ll get if your car is repaired will be based on the estimated cost to repair the damage and the coverage limits outlined in your policy, less any deductible that applies.
can you withdraw a car insurance claim check and spend it?
If you own your car outright, meaning you don’t owe money to a lender or leasing company, you can spend an insurance claim payment however you like, according to friedlander. this is also often the case if the payment is from another driver’s insurance company.
But if you have a car loan or lease, the lender or leasing company may restrict how the payment can be spent and may even require proof that the money went toward repairs, says friedlander.
If there’s insurance money left over after repairs are made, you typically don’t need to pay the excess back unless your auto insurance policy states otherwise, friedlander explains.
“Usually the repair shop is expected to complete the repairs within the insurer’s estimate. if there are funds left over, the difference is usually insignificant,” he says.
what happens to a totaled car claim check?
If an insurer totals your car and you have a loan or lease, the insurer will likely write a claim check for both you and the lender or leasing company, Friedlander says. In most cases, the lender or leasing company will take their cut first, and you’ll get the excess money.
Keep in mind that you may owe the lender or leasing company more money than the amount of the claim payment. In this situation, you must calculate 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 totaled and you owe more than it’s worth.
If payment on a wrecked car claim comes from another driver’s insurance company, you’ll need to work out details about distributing the money 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 most your insurance company would pay for your totaled car is the value of the car just before the accident, less the amount of your deductible.