Can a bank refuse to cash an ins ck until repairs are completed when it's issued to the insured party as well

Question

The insurance company paid on a claim and issued the check to the insured party and the lein holder (A Credit Union). When the insured party presented the check to be cashed the lein holder refused to cash the check until the repairs were completed to the car. The claim check included personal property loss as well as the damage to the car. Question does the lien holder(the credit union) have the right to hold the funds that have been paid? This is limiting the utilization of the funds and also depriving the insured of replacing personal loss that was also included in the claim. If the check is issued and it reads "Pay to the order of Mr.B(the insured) AND The Credit Union (The lein holder)" and the account is not in default, how can the insured receive his claim? And does the credit union have any claim to the funds issued?

Answer 1

Call the guy at the link below. He is a property loss consultant who gave me invaluable advice in the exact same situation. I owned my vehicle out right, and that may be the difference, but . . . if you can't cash the check, how can you have the car repaired?

http://www.publicadjuster.com

Hope this helps.

Answer 2

ah, they're not refusing to cash the check - they're refusing to SIGN OFF ON IT. Yes, they have the right to demand that their property (aka, the car) is repaired with the money that was intended to repair it. The alternative is to pay off the loan, then they have no rights to it.

You can go back to the adjuster, and request two checks - one for the car, one for the personal property. It should have been done that way in the first place, as it sounds like two different policies were invoked (the auto, and the homeowners).

The insured technically has a JOINT claim WITH the bank, so you can't bypass the interest of the bank - they might even have more interest than you in the car, depending on what the loan balance is.

Yes, the bank has claim - first dibs, actually - on the funds. But after the car is repaired, you get what's left over. There shouldn't be any, however, (on the car policy portion of the loss) because you should have a deductible that applies.

Answer 3

When you have a lienholder the insurance company is reponsible to them to. They know that the vehicle has to be fixed, and you should not skip off with the check. Therefore, they issue co-payable checks. First, I would ask them to cut a check separately for items not related to the repairs, that were for personal effects. Secondly, some insurance companies use directions to pay where you can direct payment to the shop directly, or they will copay the check to you and the shop, then you just sign it over when the vehicle is repaired.

Other than that, if you can't get any of that handled the way I mentioned, you may be bound by what the bank is telling you.

Answer 4

You should not have to pay for repairs until repairs are completed.

The lienholder has a right to protect the loan collateral. Yes you do own the car but the lender owns the lien.

State Laws usually require a lienholder interest to be listed on collision/comprehensive checks.

Most reputable body shops with any experience and customer services skills will deal with lienholders on your behalf. However, if you lienholder is out-of-state (like many high risk lenders) then the check will have to be sent out of state for endorsement with photos and proof of repair.

Most body shops will not release the car without full repair payment so you will ahve to wait for endorsement by lender

Answer 5

it would appear that the credit union was listed as a lienholder on the insurance policy. they do have the right to make certain that the repairs are completed to their satisfaction. if they are listed solely because they financed the purchase of personal property then they have the right to the proceeds of the policy........
if this is your situation, i would go and have a meeting with the credit union and explain the dilemma.....they should (?) be able to work with you ..