It may be hard to believe, but there are drivers out there who have never had to file a claim for an automobile accident. Unfortunately, that eliminates most of us. But, for those of you who may lose sleep at night wondering if it’s okay to keep the cash you were paid for the damage done to your vehicle or if you have to repair it for fear your insurer will ask for the money back, read on.
There are actually a number of factors to consider, some you can control and others you may have no choice as to whether you fix your vehicle or not.
Who owns the vehicle?
In other words, is there an active loan on the vehicle? If you’ve just purchased a new car and are paying for it over time or you’re leasing one, you’ve got an active loan. This is a situation that you typically can’t control. Wreck the lender’s car and it’s your immediate responsibility to get the vehicle repaired to their satisfaction in a timely manner.
In fact, most lenders will require you to list them on your auto insurance policy as a loss payee to make sure full coverage, including collision and comprehensive insurance, is in effect at all times. Answer: You have no choice – you have to repair the vehicle.
If you own your vehicle free and clear and are carrying collision and comprehensive insurance coverage, you can generally take the claims check and keep the cash.
However, whether the check goes directly to you or your insurer has a policy of paying the body shop instead of the claimant is another story. The state you live in may require car insurance companies to include a clause in your policy that requires the check to go to the repair shop assigned with fixing the damage to ensure your vehicle is repaired and road worthy. Answer: If the check is handed to you, what you do with it is up to you. On the other hand, if the check goes to the repair shop, you’re out of luck.
At your insurance company’s discretion, they may require that you make all necessary repairs to your vehicle. Failure to do so could result in the discontinuation of your physical damage coverage – the comprehensive or collision insurance portion of your policy.
From your insurer’s point of view, if they pay you for a damaged front bumper and grill and you don’t repair it, then you’re involved in a second accident that compounds the existing damage, you’re asking them to pay you again for the pre-existing damage.
Not only are you risking the denial of your claim, but your insurance company may also look at you in a very unpleasant light, which could include fraud for financial gain. You don’t want to go there. Answer: What you decide to do with the check they give you is up to you, but you better drive carefully to avoid any serious repercussions.
By repairing the vehicle, you won’t just make your car aesthetically pleasing again, but you may discover some underlying problem to the frame or other components that could put your safety at risk.
As tempting as it may be to use the money your auto insurance company hands you for a family trip to Disneyland, give it some thought before you do something you might regret later.