Q&A – Is it Safe to Deposit My Insurance Check?

Question to Parrish Law: 

I received a check for my Hurricane Ian insurance claim from my insurance company. It’s clearly not enough to cover all of my repairs. Is it safe for me to deposit the check so that I can use the funds towards repairs and then also collect the remainder of what is owed by my insurance company? I don’t want the fact that I have deposited my check to be used by the insurance company against me later to state that my claim is fully settled. 

Answer from Parrish Law:

Although the general answer to the question above will be, in most circumstances, “yes”, in an abundance of caution the answer that we’re giving here is a resounding “no”! That may sound backwards, but there are certain circumstances whereby depositing the check will be considered an “accord and satisfaction” of your claim. That means, if those certain circumstances for accord and satisfaction exist, you would be precluded from seeking additional funds for the remainder of your claim from your insurance company. If you don’t know, and are asking this question, then you should exercise caution by assuming the answer is “no”, and then discuss the case with an attorney such that you can get a definitive answer.

Accord and Satisfaction. 

Accord and satisfaction is a legal doctrine that can arise in the context of insurance claims. It occurs when a policyholder deposits a check from their insurance company that was intended to be paid in full and final settlement of their claim, and the insurance company considers the disputed matter with respect to the claim to be resolved. This means – if the circumstances necessary for an accord and satisfaction exist – that the policyholder has accepted the payment as full and final compensation, and cannot seek any additional payment for that claim in the future.

It is important for claimants to understand when it is safe to deposit a check from their insurance company without giving up the right to seek additional claim payments. In general, policyholders should be wary of depositing a check that comes with a release or any language that could be construed as a waiver of future claims. These documents may include language that releases the insurance company from liability for any future claims related to the same loss, even if those claims arise from new or previously unknown damage.

To avoid this situation, it is important for policyholders to carefully review any documents that come with a check from their insurance company. They should look for language that releases the insurance company from liability for future claims, and should consult with an attorney if they are unsure about the legal implications of the documents.

In addition, policyholders should be aware that simply depositing a check does not necessarily constitute acceptance of an accord and satisfaction. In Florida and Louisiana, courts have generally held that an accord and satisfaction requires a meeting of the minds between the parties. This means that the policyholder must have accepted the payment with the understanding that it is full and final compensation for the claim. That said, if the policyholder fails to effectively review or understand the documentation accompanying the check (or language of full and final settlement printed on the face of the check itself) that may otherwise put the policyholder on notice of the fact that the check is issued by the insurer as a full and final settlement of the claim, the policyholder will be unlikely to prevail on the insurer’s defense of accord and satisfaction simply because the policyholder “didn’t read it”. Read everything and, if you don’t understand, ask for qualified legal assistance to help you understand. 

Conclusion. 

Thus, while the answer to the above-referenced question is usually going to be “yes, you can deposit the check”, the risk of the answer sometimes being “no, don’t deposit the check because it will release your claim” should – in all cases – deter the otherwise unwary policyholder from depositing the check before getting a definitive answer to this question and before taking any action on the check. Make sure you’re right and then go ahead. Don’t risk it. Always err on the side of caution, especially where your insurance claim is concerned. 

In conclusion, policyholders should be aware of the risks associated with depositing a check from their insurance company, and should carefully review any documents that accompany the payment. They should also consult with an attorney if they are unsure about their legal rights and options, and fully understand the answer to the above-referenced question, based upon their own unique facts/circumstances, before they deposit the check.