William Lipovsky
After tearing open a check from your auto or home insurance provider, you may be surprised to find two names listed on the “Pay to the order of” line.
If an insurance claim check includes your name and the name of a second party, you’ve received what’s known as a two-party insurance check. It can be a bit more complicated to process these checks, so we’ve covered common scenarios where you’ll get a two-party insurance check and how to get the funds.
What Is a Two-Party Insurance Check?
Two-party insurance checks are the same as regular checks, except they feature two names on the “Pay to the order of” line instead of one. The names are typically written in one of two ways:[1]
- Party A and Party B. If the word “and” is written between the two names, this means both parties must endorse it in order to deposit the check into either person’s bank account.
- Party A or Party B. If the word “or” is written between the two names, this means either party can endorse the check and deposit it into their personal bank account.
Insurance providers issue checks to two individuals or entities in several situations, such as to a car owner and a lienholder, a car owner and a body shop, or a homeowner and a mortgage company. Below, we’ll discuss common scenarios involving two-party insurance checks.
How to Cash the Most Common Two-Party Insurance Checks
Below, we explain the most common types of two-party insurance checks, and how you can cash them:
Two-Party Auto Insurance Check to You and Your Lienholder
Perhaps you file a claim with your auto insurance company for damages to your car. If there is a loan on your car, the insurance provider may make the claim check out to you and your lienholder. Since your lienholder still has an interest in your car, your insurance company is legally obligated to include them on the check.[2]
How to Cash
- Get a signature from your lienholder. Once you have a signature, you can cash the check and pay the auto repair shop directly.
- Take the check to your auto repair shop. In some situations, your repair shop may be able to cash your two-party insurance check. This practice is generally accepted because these businesses are legally required to send any unused funds to your insurer. However, many auto body shops will not cash two-party insurance checks because of the associated risks — namely, they may be held liable if the check is misplaced.
- Send the check to your lienholder. You also have the option to deliver the check to your lienholder along with the repair shop’s estimate. You can request that the lienholder send you a check for the estimate and use the remaining funds toward the payment of your loan.
- Use the check to pay off your loan. If you don’t want any of the funds to be used toward repairs, you may also send the check to your lienholder and ask that all the proceeds be used toward your loan. This may be your only option if the vehicle is deemed a total loss.
Two-Party Auto Insurance Check to You and Your Repair Shop
If you still owe money on your vehicle, your insurance company may issue a check to you and an auto body shop rather than you and your lienholder. The auto body shop included on the check may be a business in your insurance’s network of auto body shops and car repair centers.[3]
How to Cash
You can take your check directly to the auto body shop named on your two-party insurance check. If you’d rather use a different repair shop, most insurance providers will reissue a check for another body shop upon request — as long as the estimates align with the estimates of your claims adjuster. If the check includes an “or” between you and your repair shop’s names, only your body shop will be required to sign in order to cash the check. If the check includes an “and” both of your signatures may be required.
Two-Party Homeowner’s Insurance Check to You and Your Mortgage Company
If you have a mortgage on your home, the mortgage company will generally require you to obtain homeowner’s insurance to protect its asset. Because the lender still has an interest in the property, your insurer must send you a check made out to both you and the provider.[4][5]
How to Cash
As with two-party auto insurance checks, a two-party homeowner’s insurance check will require you to work with your mortgage company in order to cash it. After signing the check, you must send it to your mortgage lender. Depending on the amount, your mortgage company may deposit the proceeds into an escrow account and issue funds to your contractor upon completion of repairs. In some situations, the company may issue funds in increments, but require a home inspection to verify completion before paying out all the proceeds. If the work is completed to satisfaction and comes under budget, you may receive the remaining funds.
Two-Party Insurance Check to You and Your Contractor
On rare occasions, your insurance company may issue a check to you and an approved contractor if you have a mortgage on your home.
How to Cash
If you receive a two-party insurance check made out to you and your contractor, you can work directly with the contracting company to cash the check. If the check includes an “or” between your names, only your contractor will have to sign to endorse the check. If the check includes an “and” both you and your contractor will need to sign. Make sure work is done completely to your satisfaction before endorsing the check.
For more information on two-party check cashing, see our list of where to cash two-party checks.
