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


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Licensed Auto Insurance Agent
UPDATED: 2020-03-05T16:05:13.056Z
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A silver car with minor damage to the rear bumper.

If you had a minor fender-bender with damage that you’ve decided you can live with, you might be wondering if you can simply cash the check instead of repairing the damage.

If you’re wondering if you can keep the money from an insurance claim check after an accident rather than using it to repair your car, read on.

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Can I cash an insurance claim check?

The answer to whether you have to use a car insurance check to repair your vehicle often depends on two things: whether or not you own the car outright and what your insurance policy says.

Does my vehicle have an outstanding loan?

If you are still making payments on your car, the decision on whether to use a car insurance check to repair the vehicle isn’t your decision to make. This is because the lienholder, typically a bank or credit union, still has a financial interest in the vehicle. The car is considered collateral for the loan and the lienholder will want it to be in good condition.

Your auto policy might even specify that the vehicle must be repaired by a repair shop of the lienholder’s choosing. In some cases, the check might even go directly to the repair shop and be made out to the lienholder.

Or do I own my vehicle outright?

On the other hand, if you own your vehicle free and clear, meaning there’s no lien on the car and you aren’t making payments, the decision might be yours to make as to whether to keep the check or use it for repairs. You’ll need to review your policy because state laws and insurer requirements may vary on this point.

A good indicator as to whether or not you can cash the check if you own your car outright is who the insurance check is made out to (when it arrives). If you own your car and the check is made out to you, then there’s a good chance that the decision is yours to make. If it’s made out to an auto body shop, then you’ll need to get the car repaired with the check. This may be the case even if you own the vehicle outright.

Both state laws and your insurance company’s policies are key considerations. If the check isn’t made out to you, you won’t be able to cash it in any case.

However, even if the check is made out to you, you’ll still need to verify that you are able to cash the check. If state law requires that a claim must go to repairs and you cash the check, that could constitute fraud.

Are there safety concerns to consider?

Even if you do own your vehicle outright and state law and your policy suggest that you can keep the check rather than using it for repairs, you might want to have the damage examined by an auto body repair shop.

Sometimes what appears to be minor cosmetic damage can affect or compromise safety features of the vehicle. For example, even low-speed impacts can cause damage to a car’s frame and this damage might not be apparent to you. The vehicle’s frame is an important part of the car’s overall safety. If the structural integrity is weakened, a more serious accident at some point in the future could be more dangerous than if you had repaired the minor damage in the first place.

Most states have vehicle safety inspections that require a vehicle’s systems, such as lights and brakes, to be in good working order. If your accident has damaged any of these systems, you’ll need to get them repaired. If you don’t, not only will you be compromising the safety of you and drivers around you, but you also risk getting pulled over and getting a ticket.

Can I use a repair check to pay off my car loan?

If you are close to paying off your loan and get in a minor accident, there’s another option that might be available to you, which is using the repair check to pay off your car loan.

Given that you are near the end of the loan anyway and the lienholder’s primary interest is getting the car paid for, your lender might be willing to waive the requirement to get the car fixed if the insurance money is used to pay the loan balance. However, it’s not a guarantee that you will have this option. (Again, whether this is an option will also depend on what is in your insurance policy and any state laws and regulations.)

If you find that you are able to cash the check rather than using the money for repairs, bear in mind that your insurance company has a record of the damage from the claim submission. If you get into another accident, you cannot claim this damage again. That would constitute insurance fraud, which is a serious offense.

After a minor accident, it might seem tempting to just live with the damage and use the insurance check for other purposes. However, carefully consider the pros and cons of this decision. Even if you are able to keep the check, it might not be the best option in the long run.

Get the damage assessed by a professional to ensure that you aren’t compromising your safety and check your policy and state laws before making your decision.

Have you had an insurance claim? Did you have to use your insurance check to repair your car? Let us know in the comments section below.

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