If a company cashes a stolen insurance check, who is responsible for replacing the money?
Question Details: My daughter had an insurance check stolen before it reached her. The check cashing company cashed it without photo ID. Information was given to this person per her landlord about her date of birth. The company called the insurer to see if the check was legitimate and they cashed it. The police have video of the person cashing the cash and have issued a warrant for her arrest. Now the check cashing company says the insurance company has to issue new check and insurance company says check cashing company has to replace money. Who has to pay?
It may be the case that no one is responsible to replace the money. The insurer does not have to replace stolen money, unless the insurer was negligent or careless in some way and so contributed to the theft. But do not specify anything that would indicate that, so if the money was stolen without insurer fault, they are not liable: they discharged their responsibility by sending the check.
The check cashing place may not have checked photo ID, but 1) they did call the insurer, and therefore showed some care in evaluating whether to honor the check; and 2) evidently the thief had information that your daughter that would help identify her, such as DOB--and the possiession of this information would also make a thief harder to detect. Most places do not require photo ID before cashing, accepting, etc. checks--it is not at a given, especially in light of 1) and 2) above, that a failure to check photo ID would be considered *unreasonably* careless since photo ID is only rarely asked for when cashing checks. Only if you could show that the specific facts of this situation make the failure to ask for photo ID negligent, or unreasonably careless--and nothing you have written indicates that it was--would your daughter be able to successfully sue the check cashing place for her money. If the check cashing place was not negligent, they are not liable.