QUESTION
Hail damage on a 6 year old car. Lien holder wants a work order number before they will cash check from insurance company. Is this legal?
Asked on Jun 05th, 2023 on General Practice - Texas
More details to this question:
Instead of getting repairs from hail damage, want to use money for other things. Would have to wait 3 months to get in to body shop, and would be without vehicle until repairs are completed. Also would have to rent a car due to not being covered under insurance. Very inconvenient and expensive. Is it legal for lien holder to require a work order before cashing check from insurance company?
1 ANSWER
Commercial Litigation Attorney serving Frisco, TX
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Reid Dennis & Frick, PC
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Yes. Typically your security agreement with a lienholder requires that any insurance proceeds received for damage to the collateral (i.e. your car) be used to repair the collateral.Since it is a six-year old car, you should consider paying off the lien if you do not intend to get the car fixed. Paying off the lienholder will enable you to use the insurance proceeds for whatever you like.Incidentally, this is exactly why the lienholder's name is on the insurance check--so you won't use the money for something else.
Answered on Jun 05th, 2023 at 9:22 AM