Repair my Car...or Keep the Cash?

Ok, your car has damages for which you've made a claim with your insurance company.  But you are thinking you could use the claim settlement money for other purposes more important than the car repairs.  Just because you have a claim for the repairs, does that mean you actually have to have the car fixed?

The short answer is no.  Insurance companies are obligated to pay the reasonable cost to restore the vehicle to pre-accident condition.  They have no reason to care if the vehicle actually gets repaired.  Most insurers would actually prefer to simply "cash-out" their customers.  This is often a much more efficient process for them, as they then don't have to spend time being involved in the actual repair process.  

There are some important things to consider though, prior to making this decision.  Lets review some of them:

Do you have a loan on the vehicle and is the lender going to be included in the settlement?  Most auto loans require the borrower to insure the vehicle in order to protect the lender's interest in it in the event the vehicle is reposessed.  Because of this, your insurance company will be required to include the lender in the payment for repairs.  In order for you to cash the settlement check, your lender will have to sign off on it.  Prior to doing this, they will want to verify that the vehicle has been repaired.

What is the nature of the damage to your vehicle?  There are some repairs that you should never avoid completing, especially damages that affect the safety or legal operation of your vehicle.  Damaged suspension components, wheels or tires, lights, safety equipment such as airbags and seat belts, or impacts to mechanical or cooling system componenets should always be repaired if you intend to operate the vehicle.

On the other hand, the damages may be limited to cosmetic dings, dents or scratches.  Perhaps your vehicle already has prior damages, and the additional damages to not detract much from the overall condition.  Additionally, these types of damages can be very expensive to repair.  It may not make much economic sense to use the money for repairs, especially if you have other pressing needs.

It is important to avoid making a short-term decision.  It can be tempting to take what might be a substantial insurance payment and use it for other pressing needs.  Your vehicle, though, is an important asset and in the long run the smartest move is to make sure that it is maintained in the top condition.  If you are looking at possibly selling the vehicle in the future, the overall condition of the vehicle can drastically effect the resale value.

What is the full extent of all the damages to your vehicle?  Many times, it may be difficult to know this without removing some parts for a full inspection.  For example, many accidents involve impacts to the front or rear bumper.  There are components to the bumpers that may or may not be damaged, but without removing the outer bumper cover, it it impossible to know.  Fully understanding the extent of hidden damages is something to consider in deciding how you want to proceed.

If you do have a claim for car repairs and you are thinking of not actually having the vehicle repaired, here are some steps to follow, to ensure you are compensated completely and fairly for all damages:

1. Have the initial inspection completed at a trusted repair shop.  It is important not to rely solely on the insurers estimate only.  With another estimate, you will have more information to understand negotiable areas to make sure you are being paid fairly for all of the repair costs.  We do not charge for estimates, and when you are here we can discuss the damages, help you understand the repairs and the estimate, and discuss the potential for hidden damages.

2. If there is potential for hidden damages to your vehicle, consider paying us to remove a few items to verify what these damages are.  Teardowns (taking a few parts off the vehicle) usually only cost an hour or two of labor.  The insurance company does not owe to put these items back on the vehicle, should you cash out.  Sometimes it is worth the hour or two of labor to write a complete estimate and understand all the damage.

Just because you are receiving payment for repairs to your vehicle, does not mean you are required to complete all of the repairs.  By fully considering the extent of damages, and your current economic situation, you can then take careful steps to ensure you are being paid fairly for your damages, as well as investing the settlement money in a way that makes sense for you.

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