Can an insurer legally redirect payment toan auto finance company instead of sending it to the policy holder if the loan is in default?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Can an insurer legally redirect payment toan auto finance company instead of sending it to the policy holder if the loan is in default?
I had an accident in my vehicle, for which I’ve fallen behind on the monthly payments. The insurance adjusters have given me a settlement amount but said they needed to speak to the finance company before releasing the payout. Are they required to, or can they, legally redirect the payment to the finance company instead of paying it to me?
Asked on April 22, 2011 under Accident Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
This is a contractual issue--it depends on what the policy states, who is listed as a payee, etc. For a definitive answer, you need an attorney to review the insurance policy and all endorsements, etc. amending, affecting, etc. the policy (and also it would be good to review the financing agreement as well).
However, it doesn't really matter in a larger sense. Say that they pay you instead of the financing company; you, however, have to pay the financing company, to pay off any outstanding balance. If you don't you can be sued (and also have your credit rating damaged)--at the end of the day, unless you're planning to try and "stiff" the financing company and take the consequences, you will get the same amount of cash in your pocket whether the check is written to you and you pay the financing company, or first the financing company gets their share and then remits any remaining amount to you.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.