Is an insurance company obligated to list the lienholder on a third-party check?

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Is an insurance company obligated to list the lienholder on a third-party check?

I work for a finance company and we have had customers that disappear after they receive the third-party check and never repair the vehicle. In MA.

Asked on February 8, 2011 under Accident Law, Massachusetts

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The answer to this question depends on in which state you are located.  Some states - such as Texas - address this matter specifically in state law. Other states - such as Washington - do not and so the actions of insurers vary from company to company.  Massachusetts, on the other hand. has instituted a "direct payment plan" under which the claim is paid directly to the first party claimant (the insured) and then they are obligated to use those funds to pay for work done at the repair shop of their choice.  So you are acting properly under the law.  The law, though, is flawed. Lobby your lawmakers to make the necessary changes.  Good luck.


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