Do I have to repair my car with an insurance check?

The answer is … it depends.


January 4, 2019

So you recently had a car accident (or a tree limb smashed your windshield or a local teen spray-painted something on your car door or any number of situations that auto insurance can cover) and your provider came through with a claim check to cover the damages. Congrats! Your car insurance worked just like it’s supposed to.

But now you may be wondering if you have to use that check on the repairs, or if you have the option of just keeping the money and living with the damages, or trying to fix your car on your own. The answer depends on whether or not you own the car outright.

If you have an existing loan on your car, the check has to go directly toward auto body repairs, but if you own the car outright, you may be able to spend the insurance money on whatever you choose.

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When you can’t just keep the insurance check

Pocketing the payout from an insurance claim may seem tempting, but it’s not always an option. In many scenarios, you won’t be able to keep the money yourself, and in some cases, doing so would actually constitute fraud. You should always check your policy requirements when it comes to claims money.

If your insurer sends the check directly to an auto body shop

Some providers won’t send you the claim check directly, they may require that it go straight to a repair shop as a way of ensuring you’re using the money for repairs. During the claims process, your provider may give you the option of choosing one of their preferred repair shops or picking your own.

But your provider may make it a little more difficult for you to choose your own auto body shop by requiring you to get multiple appraisals, meaning it’s usually easier to go with one of their preferred vendors. And if you go with an auto body shop your provider has a relationship with, your provider will likely pay the shop directly.

If you have a lease or loan on your car

If you don’t own your vehicle outright and instead lease it or have a loan, then the decision about whether or not to keep the money from an insurance claim may not be yours to make. It’s likely that your loan or lease company is also a named insured on your policy, and the check from an insurance claim may be made out to both you and the company, meaning you’ll need them to sign off on the repairs before you cash the check.

Your lender’s involvement will vary depending on the company, but they may require that you use the check for repairs and send them documentation proving that you followed through.

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When you can just keep the insurance check

If you own your car outright and your insurance policy doesn’t specifically require that the claims check go to your auto body shop, then the money from a claim is yours, and you can basically do whatever you want with it. Your provider fulfilled their responsibility to you by paying out the claim, and, as long as your policy and your state’s laws allow it, you can keep the money for other uses.

If the damage to your car was just cosmetic and you’d rather spend the money for repairs on something else, you might choose to do this. As long as you’ve met your policy’s requirements, it’s not fraud for you to keep the money. However it’s not always the best idea. For starters, once you’ve already claimed damage, you can’t claim it again, even if you don’t use the resulting money on repairs. And claiming the same damage again on a future accident can get you charged with.

Not doing repairs could also mean gambling with your safety. Even if you think the damage to your vehicle from an accident or incident isn’t that bad, it’s still important to get confirmation from a professional before you decide to just live with it or attempt to repair it yourself. There could be more serious damage than you realize, which might wind up costing more money and headaches down the line if you don’t fix it now.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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