by jr » Sun Nov 18, 2012 02:03 am
Our collateral was damaged in an accident; not a total loss. We are listed as the lien holder with Progressive Insurance. Progressive wrote the check for repair directly to the debtor. The debtor cashed the check and did not repair the car. I though Ohio Law protected the lien holder and that the check had to be made out in both the debtor and creditors names? Progressive's adjuster said they are not required to put the creditors name on the check. If that is correct, the creditor gets screwed to put it bluntly.
Posted: Sun Nov 18, 2012 03:55 am Post Subject:
What does your contract with the "debtor" require them to do? Are they required to list you as an additional insured? Are they required to maintain the vehicle in proper working condition? Are they required to indemnify you for the loss of your "collateral"?
You are not asking insurance questions, you are asking questions of contract law. Your contract with the "debtor" (usually referred to as the borrower) is the controlling document, not the insurance policy. Do you even have one?
You need to direct your questions to an attorney.
And its not your "collateral" that was damaged, it was your "security" that was damaged.
Posted: Sun Nov 18, 2012 04:20 am Post Subject:
I take it that this was the debtors insurance and not another persons, correct?
Posted: Sun Nov 18, 2012 11:22 pm Post Subject: THIS IS HOW OUR CONTRACT READS...
INSURANCE
You agree to purchase insurance covering this property against such risks and in such amounts as we may reasonably require, but not less than full coverage insurance including coverage against losses from fire, theft, collision, and physical damage, but not more than the fair market value of the property. In addition, you agree as follows:
(a) You authorize any insurance agent or company to name us as loss payee on any such policy so that any benefits arising from the insured risks will first be paid to us for application toward any secured obligations;
(b) You agree that we may, in the event of a loss, require additional security or assurances of payment of the secured obligations as a condition of permitting any insurance benefits to be used for repair or replacement of the property;
(c) You agree to purchase insurance from a company which is authorized to do business in Ohio and that is reasonably acceptable to us;
(d) You will maintain this insurance until all the secured obligations are paid in full;
(e) If you fail to obtain or maintain this insurance, or you fail to arrange for us to be named as loss payee, we may (but in no event are required to) purchase such insurance which will secure only our interest in the property. The amount we pay for such insurance will be added to the secured obligations, will be immediately due, and will earn interest at the rate in effect from time to time, until paid in full.
(f) You authorize the purchase of insurance to protect our interests in the secured property....
And, yes, Progressive is our "borrower's" insurance company.
Posted: Mon Nov 19, 2012 01:40 am Post Subject:
In that case I'd recommend you go to Progressive and "file" a claim for your loss. Most likely your state laws would require Progressive to protect your interest and they have not done this. My guess is that the adjuster screwed up and did not see that there was a lien holder. Are you sure you are showing up as a lien holder on the policy? Most likely Progressive will try to hide and not do anything. If that is the case then I'd recommend that you file a complaint with your states Dept Of Insurance and don't let Progressive lie to them in their answer.
Posted: Mon Nov 19, 2012 02:10 am Post Subject:
What did you do to protect your lien? Were you ever named as a beneficiary to the Progressive policy? If Progressive was not aware of your security interest, then you might have a difficult time recovering anything from Progressive. I would promptly file a lawsuit and try to get that money from the debtor before its spent
Posted: Mon Nov 19, 2012 03:26 am Post Subject: PROGRESSIVE
The progressive adjuster verified that we were listed as the lien holder.
Posted: Mon Nov 19, 2012 05:33 am Post Subject:
If that's true, and the vehicle has not been repaired even though payment for the loss has been made, then you probably have the right, under other terms of your loan contract to repossess the vehicle to make repairs and to sell the vehicle after that. While you may have a claim for money against Progressive, your principal claims are with your borrower. Again, this is not so much an insurance issue as it is a contract issue,.
Posted: Wed Nov 21, 2012 06:22 am Post Subject: LIEN HOLDER COVERAGE TX
State Farm failed to notify my company of a lapse in covereage for a vehicle that we have a lien on.. It's in the state of TX .. would we still be able to file a lien holder's claim
Posted: Mon Nov 26, 2012 02:24 am Post Subject:
It is the uniform commercial code or ucc that most states adopt as a requirement that states allow contracts or commerce to follow in order for there to be standard operating procedures to cover these types of transactions. As a repair shop I know that insurers get around this obligation by putting the shop and the insured's name on a draft complying with the ucc provision. It wouldn't be the first time a shop has signed a draft over to the policyholder for payment of minimal repairs or no repairs performed. It is not clear whether the shop is compelled to honor any contract the insured has with the financial institution or the insurer since they have no binding contract with either. It may be considered unethical but I am not sure it could be construed as illegal unless the shop conspired with the vehicle owner in advance to defraud the insurer and finance company or lein holder.
Posted: Mon Nov 26, 2012 11:18 am Post Subject:
It may be considered unethical but I am not sure it could be construed as illegal unless the shop conspired with the vehicle owner in advance to defraud the insurer and finance company or lein holder.
That's the correct line of thought. The shop is not in a position to determine whose name or names are supposed to be on a claim check.
But, unfortunately, that's not the question most recently asked. The most recent question has to do with a lapse in coverage and a failure to notify the lienholder.
If the vehicle has been damaged, but coverage had lapsed prior to the collision, you cannot make a claim against State Farm for the damage itself, since they have no duty to pay that loss.
However, there would almost certainly be a valid cause of action against State Farm for breach of contract or, at least, the common law duty of good faith and fair dealing for State Farm's failure to notice the lienholder of the pending lapse (as it certainly did the insured) which would have permitted the lienholder an opportunity to timely protect his interest.
All (or almost all) states have implemented electronic notification of the DMV by insurance companies when a vehicle's coverage lapses so that the state may take whatever action it chooses against the registered owner. The DMV would generally send a duplicate notice to the lienholder.
An experienced attorney with a background in insurance law is who you need to work with to resolve this matter.
Depending on the terms of your finance contract, you obviously should also have a cause of action for breach of contract against the uninsured borrower which might be filed as an additional complaint in the same, or probably separate, action.
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