Larry,
From my view, the check for the repairs had to be sent to the lien holder (if any lien existed) and or to a combination of the lien holder and the borrower. If the payment was sent to any other entity (the repair shop), that entity had to be named in an agreement of some record. Surely, that areement would set forth a PROCESS OF APPROVAL AND RELEASE OF PAYMENT for you to direct the insurance company to fund the agreed to expenses. The insurance company can not pay without some due process involving you either initially or after work is complete. For example, an estimate of work to be done was submitted to the insurance company. In that estimate, the repair facility has to demonstrate what they will do and the charges for the work. If it is not done according to the agreement, they in violation of the terms of the agreement. Did you assign the payment directly to the repair shop? There is a supplemental claim here... the insurance company cannot simply walk away.... Something is missing here.... With all due respect, I would get a lawyer in a "New York minute" ...and that is fast.
Sorry for the travails,
Pres