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#1300942 - 12/08/09 12:54 PM Payable Through Draft?
nbsb Offline
New Poster

Registered: 12/07/09
Posts: 6
Do the old "payable through drafts" issued by insurance companies still exist? If so, what about Reg CC availability
nd/or any other special handling?

One definition found online: A PTD is a payment instrument resembling a check that is drawn against the payor, not the bank, and for which the payor has a period of time to honor or refuse payment. These instruments are frequently used for insurance claims and other field office disbursements that have multiple signers and require final headquarters' approval. They provide additional time so that a company can ensure that all terms have been met or expenditures authorized.

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Operations Compliance
#1301214 - 12/08/09 03:45 PM Re: Payable Through Draft? [Re: nbsb]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 52932
Loc: Galveston, TX
If it can be presented for payment to the bank for payment through normal check channels, there are no return extensions:

Sec. 229.36 Presentment and issuance of checks.

(a) Payable through and payable at checks. A check payable at or through a paying bank is considered to be drawn on that bank for purposes of the expeditious return and notice of nonpayment requirements of this subpart.
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The opinions expressed are my own, take them or leave them.

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#1302076 - 12/09/09 03:30 PM Re: Payable Through Draft? [Re: rlcarey]
nbsb Offline
New Poster

Registered: 12/07/09
Posts: 6
Thanks for the reply. But if I understand correctly (and I have never seen this firsthand), these instruments are (were?) NOT "payable at or through a paying bank" but instead drawn against the payor (the insurance company) and where the responsibility for paying the draft lay with the drawee (the insurance company).

Another online definition:
Payable Through Draft (PTD) ó A payment instrument resembling a check that is drawn against a payor and not the bank. A draft is handled like a check through the clearing system, but the responsibility for paying the draft lies with the drawee. Companies use PTDs to preserve the right to review items prior to payment. (Example: Insurance companies viewing a carís damage before issuing a claim check.)

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#1302355 - 12/09/09 11:26 PM Re: Payable Through Draft? [Re: nbsb]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 52932
Loc: Galveston, TX
It basically comes down to the this. If it walks like a check and quacks like a check, then it is a check under Reg CC.

If you have to present it through channels other than the normal check collection channels - a sight draft for example, then what you are presenting would be true.

There would have to be something else wrong with the item for the bank to which you present the item to return it after the midnight deadline - endorsement issues for example.

The online definition that you quote was very true prior to Regulation CC, but no more. I know, because I spent a lot of time with our insurance and other customers that used these types of items when Reg. CC first came in to the picture explaining that it was no longer business as usual.
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The opinions expressed are my own, take them or leave them.

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