Insurance Claim

[racer6]

Hello All, I am involved in a situation with Allstate insurance. A truck I own was hit and Allstate is ready to pay, the problem arises from the fact that Allstate insists on making the claim payable to myself and the bank. The truck is paid for but has a lien by the bank,just a samll piece of collattreal on a revolving line of credit at the bank. The damage is $1250.00 and is cosmetic only it does not affect the value as it,s not worth $1200.00 and is just an extra truck.The truck is a 92 Nissan with over 200,000 miles.
I was told by the Allstate agent that it was required by Texas law that the bank be on the check with me. I asked the Allstate agent to cite which law it was, at first it was "sure, no problem", then it was we don't have to and if you don't like it drop the claim. I filed a complaint with the Texas insurance board and in response to that complaint Allstate cited the following to me. "Vernons Texas Codes Annotated" Property code sections 51.001 to 80. The section cited is 61.005 Discharge of lien. "If the property to which a lien created under this chapter attaches is paid jointly to the mortagee and the mortgagor,the lien is discharged." I don't understand how this supports what they are saying. My wifes car got hit last year and it had about $900.00 worth of damage and the insurance company paid us direct, and the car had a $20,000 loan on it.We didn't need a clear title then why do we now? Thanks in advance Mike

 

[lawrat]

I am a law school graduate. What I offer is mere information, not to be construed as forming an attorney client relationship.

The accident your wife got in? Who paid for that? Don't name insurance companies please, but was it a different company who paid you? Different insurance companies have different pay out policies. You should always make it clear with the adjustor that you want to be paid directly and quickly.

As to the whole issue of paying the bank, what kind of arrangment do you have with them? If it is more in depth than a clear cut car loan, then they WOULD be entitled. However, if it is a normal loan, then you should be have been paid directly. Contact the insurance commissioner (call your city hall to get this information) and also contact your county's BETTER BUSINESS BUREAU.

Hope this helps.

 

[racer6]

Hello Lawrat, The accident with my wifes car was taken care by the insurance company of the man who hit her.As for the trucks lien status, it is just one of several pieces of property securing a revolving line of credit I have at the bank, the line of credit is 6 or 7 years old, just a straight up secured line of credit.Put another way the truck represents about $1000 of secured property on a loan of more than $50,000.00 I guess the gnat I'm choking on is Allstates refusal to cite the law when requested until I filed a complaint. I don't see/understand how the cited passage requires a dual payee check.Thanks Mike

 

[Tracey]

This is really Lars' baliwick, but I'm up way too late, so I'll take a stab at it.

The purpose of a lien is to protect a lendor's interest by securing a loan. If the ins.co. is paying $1250 on a $1200 truck, they're junking/totalling the car. Its value is now $0. Therefore, the bank has no security anymore. Totalling the car is the same as selling it -- a seller has to discharge all liens to clear title and sell the car.

The ins.co. can't say some liens are minimal so we don't have to worry about them. It has to pay off all liens when a car is totalled/junked or IT is liable for the entire lien amount. That could be $50,000 here. The ins.co. avoids this problem by paying the check to you & the bank. That way, you have to go to the bank and negotiate with them how much $$ each of you gets. You sign the check to the bank to pay off the lien, and the bank cuts you a check for the remainder of the money.

This was not necessary with your wife's $20,000 car because the car was not being totalled, just repaired.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

 

[racer6]

Tracey thanks for the reply.The truck is not totaled or junked.It is still being used allmost daily.I would gladly sell it for $1200 to someone.Just not the insurance company.The subject of it being totaled is not an issue with them.I don't understand how them paying me only could make them liable for anything.When the truck was first pledged it had a value of about $8000.00, which has depreciated considerably.What I want to know is it the law or their policy? Thanks Mike

 

[I AM ALWAYS LIABLE]

<BLOCKQUOTE><font size="1" face="Arial, Helvetica, Verdana">quote:</font><HR>Originally posted by racer6:
Tracey thanks for the reply.The truck is not totaled or junked.It is still being used allmost daily.I would gladly sell it for $1200 to someone.Just not the insurance company.The subject of it being totaled is not an issue with them.I don't understand how them paying me only could make them liable for anything.When the truck was first pledged it had a value of about $8000.00, which has depreciated considerably.What I want to know is it the law or their policy? Thanks Mike<HR></BLOCKQUOTE>


My response:

Most States have laws similar to the following. The question that you ask is not "statutory" in nature -- it is found in "common law" or "appellate law" (judge-made law) -- i.e., that if the insured is not the absolute owner of insured property, his or her interest therein must be disclosed and specified in the policy.

However, an insurer risks tort liability for "settling around" a known lien on a claimant's recovery. Paying the claimant in disregard of such lien constitutes intentional interference with the prospective economic advantage of the lienholder. [Levin v. Gulf Ins. Group (1999) 69 Cal.App.4th 1282, 1285, 82 Cal.Rptr.2d 228, 229]

Now, you wouldn't want to get the insurer in trouble, would you? I thought not.

IAAL


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