Car insurance claims: Who gets the claims check?

Accidents can be stressful, and inconvenient and may leave you without transportation. That’s where your car insurance coverage can provide peace of mind. After an accident, you’ll need to file a claim for damages and an accident report. You may also receive a claims check for damages depending on your insurance type. 

Who receives the claims check after a car accident depends on the specifics of the insurance policy and the nature of the claim. In some cases, the check is issued directly to the policyholder, allowing them to choose their repair shop or handle the repairs themselves. However, if there is a lienholder or the insurer prefers direct payment, the check may be made out to both the policyholder and the repair shop to ensure the funds are used for the intended repairs.

Learn more about who gets a claim check after an accident, how the claims process works, how long it takes to get a check, what a claims payment can be used for and how an accident impacts your insurance premium.

Who gets the car insurance claims check if I cause the accident?

Who receives a car insurance claims check after an accident depends on the type of insurance you have.

While your state’s minimum liability car insurance is often required, it won’t cover your damages in an accident. Generally, liability insurance covers the other driver and their damages in an accident, not yours. However, if you choose a full coverage policy — with collision or comprehensive car insurance coverages — your medical and vehicle damages will be covered. 

When it comes to the claims check payout, who caused the accident plays a crucial role. If you are at fault and have collision insurance, your insurer will cover the repair costs after you pay your deductible. This is known as a first-party claim.

In first-party claims, car insurance companies have the right to pay whomever they deem necessary to settle your loss, as long as they abide by state insurance regulations. In these situations, you can’t object to the repair shop being named on the insurance check if you’ve agreed to those terms within your car insurance policy.

However, some states, such as Massachusetts, have instituted a direct payment plan, where the claim is paid directly to you, and you can then use those funds to pay for work done at the repair shop of your choice.

Practices vary by insurance company and state. Some insurers will make the check out to the repair shop and you to cut down on fraud and guarantee the repair of your car. Also, if your car is repaired at one of the insurer’s recommended or preferred repair shops, you might not receive a check at all.

While these situations apply directly to insurance coverage and payouts, certain scenarios also come into consideration when it comes to claims checks. For example, your insurance company may handle your accident differently based on ownership of the car, fault or whether you’re currently financing your vehicle.

Who gets the claim check if my car is a total loss?

When a vehicle is considered a total loss, a car insurance company will pay out the actual cash value or market value of your vehicle. Generally, this doesn’t fully financially cover a replacement vehicle. In this situation, the owner of the total loss vehicle — you or your creditor — will receive a claims check for the amount their vehicle is worth at the time of the accident. 

While vehicles may still be drivable after a collision, an insurance company could still deem a vehicle a total loss. That’s because vehicle loss goes beyond cosmetic repairs. After an accident claim is filed, an insurance adjuster will inspect the vehicle to determine if it is repairable, the accumulated cost for repairs and if should be declared a total loss.

How to get a third-party auto insurance claim check

When you receive a first-party claim, your car insurance will pay for your vehicle damages after your deductible has been met. The other driver’s insurance company pays for your damages if you’ve been issued a third-party auto insurance claim check. 

When you’re involved in an accident where you are not at fault, you become a third-party claimant. Typically, this situation is less of a hassle than first-party claims because you have no obligation to that insurance company. The insurer can’t determine who it pays because you don’t have a policy contract. Insurers generally pay you directly in most third-party claims.

Keep in mind that if you have a lease or a loan, it’s your responsibility to ensure your creditors get the money you owe them.

What happens if my car was repaired but I never got a car insurance claims check?

You may have a trusted mechanic and auto body shop that you’d like to take your vehicle to after an accident. Before doing so, you may want to review the insurer’s list of preferred Direct Referral Program auto body repair shops. If you choose this option for repairs, you may not get a car insurance claims check because the insurer pays the shop directly. You will still be responsible for paying the shop your deductible.

One benefit of using a preferred auto repair shop is that your insurance company usually covers any additional work not listed in the original estimate. Since the shop is usually pre-vetted by the insurer, you won’t have to become a middleman to figure out what insurance will cover.

Many of these repair businesses tend to be loyal to the insurance company, doing what they can to lower the insurer’s repair bill. Be aware that this can lead to cutting corners or using parts not from the original manufacturer, which can void your vehicle’s warranty.

There are regulations at a state level that prohibit insurance companies from forcing policyholders to get their vehicles repaired at their recommended facility. For example, in Massachusetts, individuals are not obligated to choose the insurer’s preferred repair shop. It’s up to the vehicle owner where they want to get their car fixed. 

How do car insurance companies pay out claims?

Car insurance claims payouts are fairly streamlined. Generally, the insurance company sends you a check or transfers the payment to your bank account. They may also send the settlement check directly to the repair body shop. 

It’s essential that you start the claims process immediately after an accident to ensure you get repair funds as soon as possible. After you file a claim, your insurance company will complete the following:

• Assign an adjuster to inspect the damage and determine how much the repairs will cost
• Review the damage estimates, your insurance coverages and deductible and accident details 
• Once your insurer approves your claim, they will either pay you directly for the repairs or reimburse you for what you paid, minus your deductible. 

How long does it take to receive a car insurance claim check? 

After an accident, it can take a long time to get your vehicle back on the road. This is partly due to the claims process, repairs and how long it can take to receive your car insurance claim check. 

Generally, it takes around 30 days to settle a small claim. However, it could take longer if the insurer needs to investigate the claim further. This could include confirming its validity, reviewing accident reports and repair estimates, and determining liability. The claims process can be time-consuming, often involving multiple steps before a claims check payout is possible and repairs are completed. 

Some states require insurers to complete a claims process within a specific period — delays to processing can also increase the wait time for a claims check. For example, California state laws obligate insurance companies to acknowledge a claim within 15 days, accept or reject a claim within 40 days and send the payment check to the insured within 30 days. If your insurer fails to acknowledge the claim after 15 days, you can contact the state’s insurance department.

Do I have to repair my car with an insurance check?

The vehicle situation you’re in — own, lease, or finance — will determine what you can do with your insurance claims check. If you hold your vehicle title, the money you receive is yours to do as you like. You don’t have to use it for repairs or replacements, or you could choose to find a cheaper auto shop or fix it yourself. 

However, if your vehicle is financed or leased, the claims check you receive will have to be used on repairs and will often have specific criteria for how the funds are used. By understanding the claims process, you can expedite repairs by making an appointment with your dealership or other approved repair affiliates. 

Before you decide what to do with your claim payout, you should consider a few important points: 

• Mechanical issues may crop up: If you choose to use the payout funds for something other than repairs, you could end up having to pay for them out of pocket. This is also true if your cut-rate mechanic makes a less-than-professional repair or worsens the problem.
• Future claims will be scrutinized: If you get into another accident or suffer damage from a storm, your insurance company will refuse to pay to repair previous damage you didn’t previously fix. 
• Some repairs are necessary: While you may be fine driving a dented vehicle, some repairs are necessary and can cause serious injury if not fixed. Ensure your vehicle damage doesn’t impact electrical or safety systems and have it repaired if it does.

You should also consider state laws, which may require vehicles to be driven with specific features, such as bumpers. Make sure you know your state’s requirements so you can fix those features, if necessary, with the claims payout you receive. 

How much do car insurance rates increase after a claim?

As you’re navigating the claims process, you may be wondering how it will impact your insurance rates. Much like receiving a moving violation or driving under the influence (DUI) conviction, your premium will increase after an accident claim. Learn how much more you could anticipate paying after your first, or second, insurance accident claim. 

After a comprehensive insurance claim 

How much you pay for car insurance after an accident depends on the type of coverage you carry. If you have comprehensive car insurance — coverage for accidents, environmental hazards, like floods and hail, thefts and vandalism — your car insurance will increase by 6.38%, or $121 annually, for your first claim over $2,000. 

It nearly doubles for a second comprehensive claim — $239 annually. Learn more about how claims impact your comprehensive car insurance premiums in the table below. 

Expert insight on common claim checks issues 

According to Mark Friedlander, director of corporate communications for the Insurance Information Institute, a common claim check issue is getting multiple checks for a claim — particularly when you are an accident victim and the responsible party’s insurer is covering the claim.

“The insurer may issue a check based on the initial repair estimate and then additional funds as the estimate is updated. Some claimants are reluctant to cash the first check until the claim is finalized,” he says. “You don’t need to be. Cashing a check does not waive your rights to additional funds to cover the claim.”

Another common issue he sees is that insurers may issue a two-party check that lists the claimant and the repair shop. He says they do this to ensure the funds are used exclusively for the repair covered by the claim. Additionally, your insurer may pay the body shop directly for repairs.

“If you have an auto loan or lease, the claim check is typically made out to the financing company instead of the claimant. In these cases, the check will need to be endorsed by you and your lender in order to pay for the repairs.”

Final thoughts

When you’ve been in an accident, whether you’re at fault or not, it’s essential to start the accident claims process with your car insurance company immediately. The claims process can be lengthy based on the type of accident you were involved in if you finance or lease a vehicle, and if there are various damages to cover. 

If you own your vehicle, you have more options regarding a claims check, as the funds go directly to you; however, you need to consider all options regarding repairs before you consider the claims check a financial windfall.