How will an auto insurance company pay me for a claim?

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Things to Remember...
  • There are several different ways that an insurance company could payout a claim
  • Read through your policy so you know the expectations for payout claims processing
  • Research can help you make sure you are not surprised at all when it comes to getting paid for a claim

Each automobile insurance company has a specific procedure for providing the funds to the policyholder following the approval of a claim.

Auto insurance policy documentation provides specific information concerning the situations that occur where the insurer has the right to deny an accident claim.

Once the accident claim is filed, the insurance company will verify the facts and require the policyholder to comply with traffic law, which requires police reports to be filed in a timely manner.

The auto insurance policy must be in force, or paid current, for the insurer to approve, and pay, claims.

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Check to Policyholder


An auto insurance claims adjuster will meet the policyholder where the automobile is taken after the accident. Damage will be assessed, which includes the estimated cost of repairs.

Extensive damage can result in a decision to declare the vehicle “totaled.” A specific amount of money is provided by check directly to the policyholder.

Cashing the check is the legal agreement to the amount that is written on the check. Disputes that follow cashing the check are impossible to win.

A wise policyholder will conduct some extensive research prior to cashing the check from the insurance company.

An automobile that does not have a loan against it will be handled in this fashion. Dealing with denied claims from auto insurance companies can be a bit harder to handle.

Check with Policyholder and Lender Names


Auto insurance companies track the lenders that are holding the titles to vehicles insured through their companies.

Policyholders will receive a check with the lender name in addition to their own name if a loan is on the vehicle.

In this instance, the policyholder is required to visit the lender to fill out a form stating their intention to have the vehicle repaired.

A body shop will not begin repairs until the policyholder proves that the lender has co-signed the check.

Insurance adjusters will ask the policyholder if the loan has been repaid in full prior to writing the check.

Check Made Out to Body Shop

The insurance company has the option to write the check directly to the body shop.

This practice is less common than the other two approaches to providing funds to the policyholder for an approved claim.

Insurers will maintain a list of approved body shops that keep their costs low in exchange for the repair business.

This method is beneficial to the policyholder when the body shop mechanic finds hidden damage that is not covered in the original estimate.

Costs that exceed the original amount will be addressed between the body shop and the insurance company without unnecessary involvement of the policyholder.

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Timing of the Payment

Many people rely on their vehicles to go to work and conduct various important life activities. Insurance companies understand the importance of repairing a vehicle in the shortest possible time.

Each insurer will follow an individual schedule for payments made for the approved claim that follows an accident.

Policyholders can determine which applies to their situation by reading the policy documentation:

  • First adjuster visit – Some insurance company representatives, called adjusters, are authorized to estimate the cost of repairs and write a check immediately. The policyholder is trusted to use the funds for the cost of repairs
  • After estimates – Other insurers will require a specific number of estimates from various local body shops prior to providing the funds for the repairs. The lowest estimate is not necessarily the claim paid by the insurance company
  • Recommended body shop – After the repairs are completed, the insurance company pays the body shop for the final invoice amount. This method can encourage the body shop mechanic to work more quickly since he will not be paid until the car is repaired

Cautionary Statements


Policy documentation will provide specific information about the money provided after an auto insurance claim is approved.

Lenders and insurance companies have expectations about the claim payments that must be met:

  • Car must be repaired – Receipt of a check from the insurance company for an automobile claim does not mean that the policyholder is free to spend the money on other obligations. At some point prior to the sale of the vehicle, the policyholder will want to address the damage incurred in the accident
  • Hidden damage – Every policyholder must understand how hidden vehicle damage will be addressed. Postponing the cashing of the first check from the insurance company allows the policyholder to dispute the amount of money provided. Insurance representatives will make recommendations about how to handle a discovery of additional damage
  • Avoid fraud – State laws differ, so the policyholder is wise to conduct research about the requirements concerning the funds provided for valid auto insurance claims. Defrauding an insurance company carries stiff, long-lasting penalties

Final Evaluation

Research is an important part of understanding the details associated with an auto insurance policy.

All payout details are written into the documentation, so the policyholder can avoid surprises if an accident occurs.

Some auto insurance shoppers will choose an insurance company based on their claim payment method.

An insurance agent or customer service representative can provide details concerning the payment procedures during the underwriting process.

Use our FREE car insurance comparison tool with your ZIP code to find affordable quotes now!

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