If
you have ever read your policy, then you know that auto insurance can be very
complicated, especially when making claims. Still, there is no way around it.
That is complicated. Who gets paid when a policyholder makes a claim?
Who is claiming?
Insured
There are several primary factors involved in
determining who gets the money. First, what to do with the person who pays for
the loss. It almost always depends on who has caused the accident. If the
insured (that's you) is at fault, the repair bill will be paid by your
insurance company.
Other
drivers
If it is the fault of the other driver, the other
driver's insurer is on the hook for the expenses. That is known as a
"third-party" claim. That is, you, the damaged party, are
accidentally seeking payment from the driver and his or her insurance company- two
parties with whom you have no contractual agreement, hence the term
"third-party."
Since
there is no contractual agreement, the at-fault driver's insurance company is
under no obligation to pay anyone other than you, so the settlement check must
be made in your name. That is typically the case even if there's a lien on your
car.
When you have a loan on your car
If you have a loan on your car, things can get a bit
complicated. Your insurer knows that you have a mortgage in your vehicle and
keeps track of that loan. Therefore, when a policyholder claims damages, the
insurance company should generally provide both the insured and the lienholder
with the claim. Since the lienholder is still interested in the insured car, it
wants to make sure that the claim payment is used only for repairs, not your
personal use.
Therefore,
when the insured receives a claim check from the insurance company, they will
require getting the lienholder to sign the check and cash it and pay the repair
shop. If your vehicle is at a total loss, the insurance company will write the
check for the vehicle's actual cash value (ACV) minus your deductible, and send
it to you. You will then sign the check and send it to the lender to repay the
loan.
When no loan on your own car
The
insurance company will have to write the check directly to you if you own the
vehicle directly and there is no mortgage involved. But there is one thing that
is very important to remember. When you plan not to use the money from your
settlement fee to repair your car, if you get caught in another accident, you
may run into some trouble with your insurance company.
That is because they will not pay you for any
pre-existing damages. In other words, the insurer will decide whether a recent
accident has damaged your car. And you can trust that if there is any
uncertainty, they will attribute the damage to the prior accident and refuse to
pay. Who can blame them for this? They have already paid for them once.
Therefore, if you feel that you will not fix your car when you get your claim
check, you may want to think again.
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