We have a business customer who completes repair work for an insurance company. When he receives payment from the insurance company, the checks are made payable to him and the individual who received the repairs. My question is how does our customer negotiate these checks when the insured individual is usually not available to sign the check with him, and at the same time protect the bank from any recourse? Is there a document our customer should provide us to hold us harmless for accepting these checks? This is a common situation and there has to be a correct way to protect the bank and service the business customer.

Actually, Jane, the whole reason the insurance company includes the insured's name as payee is to be assured that the agreed-upon work has been completed, and to release the insurance company from further liability on the claim. Soooo, Jane, your customer is going to have to chase down the joint payees and get their endorsements. It's part of the cost of doing business with or for insurance companies.

I recall from my days on a loan desk that it wasn't unusual for the customer to get a check from the insurance company, payable to the customer and us as lienholder. We in turn cut a check to the customer and the body shop.

When the work was complete, the customer could sign the check and pay the shop.

If the customer gets the check first, you won't have this problem.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.