Can you just keep the cash from a car insurance payout and not put it toward repairs? That really depends on whether or not you fully own your vehicle. If you don’t completely own your car, then the answer to this question will most likely be no: money awarded for repairs generally go directly to your repair shop.1
If I own my car, can I keep the money from an insurance claim?
If you own your car outright, you can choose to not repair your vehicle for financial reasons, or delay repairs with the money you receive from an auto insurance payout. Simply put, you do not have to use any of the compensation you receive from an auto insurance company on repairs. That said, here’s a few things that you should consider before making this decision.
How much should I spend to fix my car?
First off, if your car has suffered major damage, most likely you’re going to need to fix it sooner rather than later. Even if you take your auto insurance payout and use it for something else, you’re still going to have to make the repairs eventually, so it might not make sense to wait. Also – and this should go without saying – if your vehicle is in any way unsafe, it’s wise to use your payout to fix the problem. And, if you do not fix your car, that amount of damage will likely reduce its value in future losses.
Another consideration is that sometimes if you do not make repairs immediately, your vehicle may end up incurring additional damage. That additional damage will almost certainly not be covered by your auto insurance because it was a direct result of your negligence in not using your initial payout to make the needed repairs.
Can I keep my car if it’s considered to be a total loss?
Finally, if your vehicle is deemed a total loss, you probably won’t be able to have your cake and eat it too. In order to receive your payout, in most states, your auto insurance company will possess your totaled car as a condition of its payout.
Unlike getting a few dents in your back door and deciding that you’d rather have the money than get those dents banged out at a body shop, if your car is deemed a total loss (even if perhaps you feel it is still road-worthy) you will not receive your payout unless you give up your car. There are a few states that will allow you to retain a salvaged vehicle if you pay the salvage value to the carrier, but you’d need to obtain a salvage or rebuilt title in that case.
Your insurance experts at Answer Financial recommend that in all cases, you should use the money from a car insurance payout wisely. If your car is in need of repair, it’s wise to fix it immediately to help keep others and yourself safe on the road.
Who is Answer Financial?
Answer Financial is one of the largest auto and home insurance agencies in the nation. We’ve insured more than 5 million homes and vehicles for people like you who are looking to find the right insurance for your needs and budget.
To compare side-by-side auto insurance quotes from top-rated insurers online, visit AnswerFinancial.com. Or, call 1-800-258-5101 to have one of our license insurance experts walk you through your options, compare coverages and discounts and help you complete your purchase.