by luvdrgnflies » Wed Aug 22, 2012 04:10 pm
Recently, my husband and I were involved in a motorcycle accident. The insurance company cut us 2 checks, one for the bike itself and another for the accessories on the bike. They total almost $2300. We have both been off work for 8 weeks due to the accident and would like to use some of the money for living. I understand the bike needs to be fixed but all the repairs can be done for less than $700. Because there are scratches on one of the leather saddle bags the insurance estimated $250 for a new one. We don't feel it necessary to replace it, it still serves it purpose. Exhaust pipes on the bike were valued at $1400 and new ones will cost $500. That is where some of the differences are. My question.....is it legal for the leinholder to say we have to get bike repaired and turn over the remainder of the check to them to go towards the loan on the bike? Or are we able to have repairs done and get the remainder of the check to help with living costs?
Thanks
Thanks
Posted: Thu Aug 23, 2012 01:54 pm Post Subject:
The lien holder should require all of the repairs be done before they sign off on he check. Them keeping any excess is a legal question... not insurance.
Posted: Thu Aug 23, 2012 11:11 pm Post Subject:
is it legal for the leinholder to say we have to get bike repaired and turn over the remainder of the check to them to go towards the loan on the bike? Or are we able to have repairs done and get the remainder of the check to help with living costs?
What is "legal" is the lender enforcing it's contractual right under your loan contract. If your loan contract requires you to maintain the vehicle in working order at all times, then you must repair the vehicle, and it is within its right to hold the insurance check in order to force you to make repairs to the vehicle. The lender cannot demand that the repairs be made at any particular place, but it can demand that you not attempt to make repairs on your own -- if that's what the contract requires (i.e., the contract states something like, "All repairs to a damaged vehicle shall be made at a licensed repair facility").
The lender is not entitled to retain any of the excess insurance proceeds unless you owe the lender something other than the next loan payment (you paid the insurance premiums, it's "your" money). In other words, if you are behind in loan payments, the lender may keep any portion of the insurance payment in excess of what's required to repair the vehicle. But if you are current, they cannot, for example, keep any balance of funds and tell you, "We have applied the excess amount to your next payment." You have the right to do with the excess whatever you desire, as long as you are current on your loan payments.
If the vehicle were considered a total loss, then the lender could keep the entire insurance payment -- but only up to the remainder of the unpaid loan balance. It could not withhold an "early repayment fee" that was once a common charge in many retail auto loan contracts. And it could not keep any other portion in excess of the unpaid loan principal and interest unless you contractually owed them some amount (such as unpaid late fees on the loan). To say something like, "We'll apply the excess insurance payment to your next home loan" or "to the late fees you owe on your home loan" would not be lawful -- that is a completely different contract, and it has different rights under that contract.
In short, get the repairs done as quickly as possible.
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