Yes, any settlement check will usually arrive made out to both you and your lien holder, which will want the value of the asset it still owns protected. If the check is made out only to you, your finance agreement would still normally require you to notify your lien holder about the damages and insurance payout. Most lenders mandate you use the money for the needed repairs.
If you have not paid off the loan, you are obligated to repair the car to its original condition. Failing to do so could be illegal. This could be fraud, if you pocket the money when the car isn’t owned by you. It is the lenders investment. If you keep the money from your comprehensive insurance for hail damages, your lien holder is going to take issue as their asset is not being repaired.
Your loan or lease agreement probably stipulates that you must keep the car in good shape and working condition. Most lenders require you to place them on your auto insurance policy as a loss payee so that the insurer will issue any check for repairs (or the totaling of the car) to both you and your lien holder. So, it is a big mistake to pocket insurance money if you have a loan or a lease. Also, if the claim amount is not used to repair vehicle or is not applied to any liens against the vehicle, the vehicle value would not be sufficient to satisfy the lien in the event the vehicle is sold or traded. If the vehicle is leased you will have to pay for the repairs before you turn your lease in or be charged top dollar for the repairs.
To cash a claim check made out to both of you, endorse the check and send it on to the lien holder. They may require you to send documentation that the repairs were made (such as a copy of the repair bill and photographs of the repaired car) before they will sign over the check to you or a repair shop. If you cash a check made out to you and the lien holder without their endorsement (or by forging their signature), this is considered fraud and get you into a lot trouble.
If the hail damage isn’t extensive and your loan is almost paid off and you plan on using the claim money to pay off the loan. Then contact your lien holder as they may not require you to get the repairs made. Don’t be surprised though, if they still demand that you fix the car. If your lien holder does allow you keep the money and skip the repairs, remember that this now pre-existing damage. The insurer will take this into account if your car sustains damage in the future. Your insurer will deduct for this previous damage if the car is damaged in the same area or if the car is totaled out.
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