Do I Have to Repair My Car with an Insurance Check?
After being involved in an auto accident, you may file a claim with your insurance company to cover the costs of repairs to your vehicle. The process and outcome can vary depending on your insurance company and your specific situation, but normally, you file the claim and once it’s approved, an insurance check is issued.
The check will help you pay for repairs to your car. But what if you feel you can handle minor repairs? Or what if you have a more pressing need, such as rent or bills? Can you use your car insurance check for something other than repairs? The answer depends on a lot of factors which may affect how the check is issued and how much control you have over it.
Your Insurance Company Might Not Send the Check to You
Every insurance company is different in the way that they handle claims. Some may issue the check directly to you, but some may send it to an auto repair shop. This is especially true if they work with preferred shops. This is a beneficial arrangement for them, because it allows repairs to go more smoothly and removes you as the middleman, but it also means you have no control over how the insurance check is spent.
There May Be a Lienholder Who Has Control Over the Payout
If your car is still under a lease or loan, the lienholder may have some say in how the check is spent. Normally, the terms of the lease or loan require you to keep the vehicle in good condition until the lease or loan is paid off. This will require you to use insurance payouts to repair the vehicle.
You must also consider who the check is being sent to in this situation – sometimes it will be sent to both you and the lienholder, in which case you must have permission from the lienholder to cash the check.
State Laws May Influence Who Receives the Insurance Check
There are sometimes specific requirements for the process of issuing insurance checks. Some require checks to be sent to the person who is covered in the policy, while others may require lienholders to be named in all policies and checks. It’s important to know what your state laws detail and whether you (and your insurance company) are in compliance.
You May Be Held Responsible for Future Problems
If you receive the insurance check directly but decide not to repair the car, you could be entirely responsible for problems that result from the unrepaired damage in the future.
For example, if an accident leaves you with front-end damage that affects the engine and you never get it repaired, this could lead to engine troubles in the future. Because it could have been avoided by repairing the initial damage, your insurance company will likely not cover any engine repairs you need. This leaves you entirely on the hook for expensive engine repairs.
Your insurer has their ways to estimate car insurance costs that should be attributed to potential repairs, so if you require service beyond that, it won’t go unnoticed. Future problems may need to be paid out of pocket as a result, so be mindful of this.
When Can You Use an Insurance Check for Other Purposes?
If you own your car outright, with no current leases or loans, and you don’t have an arrangement with your insurance company to send the check to a preferred auto shop, the insurance check will be sent directly to you and you can then use it as you wish.
It’s a good idea to use it for repairs to your vehicle, but if you have already repaired it yourself or feel confident that you can do so, feel free to put that money where it is needed. Just remember that if the damage is never repaired and causes problems later on, you will be responsible for the repairs, which will likely be more expensive than they would have been originally.
All companies that offer coverage for collision make use of a fairly accurate cost calculator, so keep in mind that you can’t file a claim twice if you didn’t use the money to fix it the first time.