What is the legality of depositing a check for an auto claim written to both myself and the lienholder?

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What is the legality of depositing a check for an auto claim written to both myself and the lienholder?

I was issued a claim check from my car insurance due to hail damage on my car, and although the check was issued to both the lender and myself, my bank accepted the check for deposit. Obviously I have to report to the lender that the check was deposited, and then I am wondering what happens next? Do they require a receipt of the repairs completed, or can they legally ask for all the money back, since their name was also on the check?

Asked on October 16, 2010 under Insurance Law, Arizona

Answers:

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

Answered 11 years ago | Contributor

Can I ask: who had the car repaired and who paid for it?  Did the lender?  That would seem unusual.  I am assuming that you had it repaired and the only reason that the lenders name is on the check is so that the inurance company makes sure that they know - as technically the owner since it is the tited in their name until the loan is satisfied - that the claim was settled.  I am sure that they are going to want to see some documentation that the repairs were made and the amount of the check.  If the repairs equalled the check then why would they ask for their half?  I think that you should contact them and see what they say about it all.  The way that this question is phrased has me concerned as to what's and why's.  If you need clarifaction after you speak with them please write back.  Good luck.


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