Can you just keep the cash from an auto insurance claim payout and not put it toward repairing your car? First, that depends on whether or not you fully own your vehicle. If you don’t fully own your car, the insurance check is often made payable to both you and the lender or repair shop, which can limit how the funds are used.
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. However, driving an unrepaired, damaged vehicle could violate state safety laws or inspection requirements, depending on where you live.
If your vehicle is in any way unsafe, it’s wise to use your payout to fix the problem. And, if you do not make repairs immediately, your vehicle may end up incurring additional damage. That additional damage will likely not be covered by your auto insurance because if it was a direct result of not using your initial payout to make the needed repairs.
If I don’t own my car, can I keep the money from an insurance claim?
If you’re still making payments on your vehicle or leasing it, your lender or leasing company likely has a say in how your insurance payout is used. In most cases, the check is made payable to both you and the lienholder. That means the funds may be sent directly to the repair shop or require both parties to endorse the check, ensuring the money goes toward fixing the vehicle.
Because the lender has a financial interest in the vehicle, they want to make sure it retains its value. Skipping or delaying repairs could violate your loan or lease agreement and even result in the lender demanding full repayment or taking other actions to protect their investment.
What if I get overpaid on a claim? Can I keep it?
While rare, overpayments from an insurance company can happen—especially if the damages were overestimated or repairs came in under budget. However, keeping extra funds from an insurance claim could be considered unlawful if you misrepresent repair costs or damages to inflate a payout, especially if the discrepancy is discovered later during an audit or claim review.
If you suspect you’ve received more money than necessary, it’s best to contact your insurance provider and clarify the situation. Returning the excess not only helps you stay on the right side of the law but also protects your credibility for any future claims you may need to file.
Am I able to do the repairs myself and keep the check?
Yes, if you own the car outright, you can usually perform the repairs yourself. This approach may appeal to DIY enthusiasts or those with access to discounted parts or labor. However, make sure your insurance provider knows you’re opting for self-repair, and be aware that they’re unlikely to cover poor workmanship or future damage resulting from incomplete or improper fixes.
Additionally, if you plan to eventually sell the vehicle, consider that a professional repair job may be more appealing to buyers and could help preserve the car’s resale value. And if your state requires a post-repair inspection for safety or registration purposes, you’ll need to ensure your work meets legal standards.
Can I keep a totaled car?
If your vehicle is deemed a total loss, or totaled in most states, the insurer will take ownership of it in exchange for the full payout. However, you can often request to keep it by accepting a lower settlement and applying for a salvage title.
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 you feel it’s 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.