Reporting insurance claim overpayment to credit report
Date: Fri, 04/30/2010 - 04:15
I'm worried because I have receive overpayment on a claim from my auto insurer. I haven't reported the overpayment to them. However, I'm wondering if they would find it out later and come after me for the excess amount.
Once a claim check has been issued, the money becomes yours and
Once a claim check has been issued, the money becomes yours and the insurance company would have no claim over it. Most likely they wouldn't come after you.
[QUOTE="SC"] Once a claim check has been issued, the money beco
[QUOTE="SC"]
Once a claim check has been issued, the money becomes yours and the insurance company would have no claim over it.
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Well, if the insurance company overpaid the claim and it was a bona fide error on their part, then you are not entitled to keep the overpayment. That would be like you overpaying your car note, and your lender saying "Once we cash your check, the money becomes ours and you have no claim to the overpayment." Legally it just doesn't work that way.
Insurance companies are so big and process so many claims, that most likely they will not catch their mistake (unless you're talking about thousands of dollars). However, if they do eventually catch the mistake, then you would be obligated to give it back. I'm sure they would send you a letter first asking that the difference be returned to them. Insurance companies don't report to the credit bureaus, so they would probably have to send it to a collections agency first before it affects your credit bureau.
About 8 months ago my company received an insurance claim check for a claim that had already been paid out (insurance company paid us twice), for about $2600. Well, we cashed the check, and accounting-wise we keep the funds in a contingent liability account just in case the insurance company realizes their mistake and asks for it back (our liability is contingent upon them finding their error). As long as they don't ask for it back, we keep it. We've already passed the 12/31 end of their fiscal year, which is probably where they'd catch the error when they audit their clearing account. Probably after 2 or 3 years, we'll credit that liability to an income account.
