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Once your post-accident auto insurance claim is approved, your insurance company will issue a check to pay for the repairs. But what happens to money is not always clear.

The most common scenario after filing an auto insurance claim is that your insurance company will send you a settlement check directly, then cash it and use the money to pay the mechanic once the repair has been made. There are exceptions.

Various factors, such as whether you have a car lease or loan and whether your insurance company encourages you to work with a favorite mechanic, influence how the process goes and how much control you have over how your car insurance is reviewed. .

Your insurer might send the check directly to a repair shop

Many auto insurance companies encourage their clients to work with one of their favorite auto body repair shops or with a "direct referral program." You can usually choose the repair shop you want, but if you go with a preferred shop, you will likely pay your insurance company directly to the repair shop. In other words, you will never receive an actual check for an auto insurance claim; You will only be responsible for paying the mechanic's deductible amount.

An advantage of going to a favorite auto repair store is that your insurance company and the store will cover any additional work for free if something goes wrong or it turns out that there is more work to be done than originally thought. Plus, you don't need to worry about acting as a go-between between the store and your car insurance company.

You may need permission from your lienholder before cashing the check

If so, you will need the finance company to sign the security check before you can cash it. The amount of supervision your loan company wants through the claims process can vary widely, and it depends primarily on the loan company how much control it requires.

• Sometimes the representative will simply verify if the accident occurred, sign the check, and send you your way.
• Your loan officer may also ask you to sign the company's auto insurance check and will pay the repair company on your behalf.

Things are a little different if you are involved in a collision where the other driver is at fault and his liability coverage pays the claim. This is called a "third party" claim - you are the third party and the at-fault driver, and your insurance company is the first and second party, respectively. The other driver's insurance company will not know if your car is financed or not and has no contractual obligation to your finance company. As a result, the settlement check is usually sent directly to you.

But regardless of whether the name of the loan company appears on the check, according to the terms of your lease or loan, you must keep your car in good condition, so it is best to repair your car according to the terms of the contract. lease. . Otherwise, you could face a fine at the end of your lease or even get your car back.

When you don't have to make an insurance claim, check the money to repair your car

If you own your car completely and your insurance company breaks a check after filing a claim, you can technically do whatever you want with the money collected, like go on vacation or buy a new TV. Technically, you don't need to spend money to repair your car. But there are a few considerations you need to take into account before doing so, whether you are trying to find a mechanic to repair the car for a lower price, trying to fix the problem yourself, or completely ignoring the problem and using the money to other purpose.

The biggest drawback to using car insurance claim verification money for another purpose is that you will be responsible for the additional costs if the car problem worsens.

Regardless of whether the reason is that you ignored the problem and it got worse over time, or the defect got worse during the unprofessional repair process, your auto insurance company will not pay for the additional damages. You will have trouble for any additional costs.

Also, auto insurance companies won't fix things more than once and fear that people will rip off by filing the same claim multiple times. So if you run into the same problem again, such as if your car has been damaged by hail multiple times, your insurance company will do a thorough investigation to make sure you are not committing fraud.