How to Cash a 30K Settlement Check

How to Cash a 30K Settlement Check
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People across the U.S. may receive settlement checks from insurance companies to provide compensation for damages or losses from specific events. These events may include car accidents or personal injury settlements. In the example of a car accident, there will often be a combination of damage to personal property and physical injuries. Since an insurance settlement check can be very large, you'll need to know the procedures for cashing it.

Insurance Settlement Basics

Settlement money is issued via a settlement check after an insurance claim is approved or after all legal fees have been paid. It is very similar to a personal check in most ways. The settlement amount may yield a check for a large amount or multiple checks.

A settlement check might be issued directly to a claimant from an insurance company, or it can be paid from an escrow account via a law firm. Forbes reports that the average settlement amount for car accidents is ​$20,235​ for personal injury settlements and ​$4,711​ for property damage settlements in ​2020​.

Most settlement checks are payable to the insured claimant and any third party involved in the case, such as a vehicle passenger or an auto shop and other service providers. How this is handled will depend on the policy, claim details, insurance company and the state where the claim is filed.

Access to Insurance Settlement Money

The simplest way to access settlement money from a large check is to deposit the check into a bank account, such as a savings account or checking account. This can be done from an ATM at many banks and credit unions. Not every person has ready access to a bank account, or a bank deposit may simply not be an option. This leaves the matter of cashing a settlement check.

Keep in mind that a bank is unlikely to cash a check for an account that exceeds funds availability. Large check deposits can take up to a week or ​seven business days​. A large amount deposit is one that totals ​$10,000​ or more for a cash transaction.

Financial institutions are required to record all transactions over ​$10,000​ per the Bank Secrecy Act to prevent fraud and money laundering.

Insurance Settlement Checks

The parties to a check are the person writing the check, also known as the drawer; the bank on which the check is drawn, called the drawee; and the payee, which is the person to whom the check is made out, typically the claimant.

On the front of a settlement check, usually under the numeric dollar amount, you will see the name of the drawee bank. Some insurance checks feature the names of two banks: a drawee bank and a bank through which the check is payable.

In the case of a settlement check, the drawer is the insurance company, while the drawee is the bank where the insurance company keeps its money for payouts. The person who is entitled to the settlement funds is the payee.

Often, settlement checks issued by insurance companies are returned unpaid because the issuers require endorsements to match the payee line.

Omitting a middle initial or suffix or abbreviating a name could cause the drawee bank to reject the item for improper endorsement. If you have a settlement check made payable to you and a third party, both of you must endorse it, and one of you can deposit it in an account if that is an option.

Financial Institutions and Settlement Checks

If negotiating your check involves just one bank, look the bank up online and locate a nearby branch. A photo ID such as a driver’s license will be necessary to cash a check. Cashing a high dollar amount check may require multiple forms of ID.

If your check names two banks, call the drawee bank. Explain your situation to the bank representative. Tell the representative you have a ​$30,000​ settlement check that you need to cash. Ask when you can cash it and what information you will need to provide to do so.

The bank may refuse to cash the check because federal laws do not require banks to negotiate checks for non-customers. Further, banks do not keep an excess amount of cash on hand.

If the bank teller agrees to cash the item, they will probably require you to wait ​two​ or ​three​ ​days​ for the bank to make a special cash shipment order.

Another option, according to Experian, is to use an easily obtainable prepaid bank account that can accept direct or check deposits. While many might consider a check cashing store, the amount of cash that can be issued is often capped at limits more aligned with weekly or bi-weekly wages far lower than ​$30,000​.