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Q

Is there a law in New York State that states the insurance company must send a claim check to both the policy holder and the lienholder?


A

No. According to the New York State Department of Insurance, there is not currently a state law that specifically addresses the issue of whom a car insurance settlement check should be made out to if there is a lienholder.

If you have made a claim through your own car insurance company, then the proceeds of any settlement will be paid in accordance with the terms and provisions of your car insurance policy.

We surmise it is a first-party claim -- one you're making against your own policy -- because you asked about the policyholder's rights. While there is not a New York State law that requires the check be made out to you and your lienholder, it's likely that your policy says that is what your insurer will do, and your finance paperwork typically requires it to be done this way.

If your claim is a third-party claim (through the at-fault party's insurance policy), then it would be up to the guidelines of insurance company issuing the check to determine whom the check will be made out to.

While with your own insurance company you have a lienholder and loss payee listed on your policy, the third-party insurance company doesn't have a policy contract with you and may pay you directly for repairs unless there is a lienholder to be included.

When a check is made out to both parties, then normally you would have to provide proof that your vehicle has been repaired before the lienholder endorsed the check.

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