Do I Have to Fix My Car With My Insurance Payout?

If you are involved in a vehicle accident, and you have insurance coverage, your first step should be to notify your carrier. If you file a claim, your policy could pay you cash for the cost of your repairs and other damages.

Does that mean you have to spend that money on those repairs? Unless your insurance policy or loan documentation says otherwise, you are free to use that money as you see fit.

If your accident involved another driver, things could be further complicated. How you proceed will depend in part on whether you were responsible for the accident. In either case, it is in your best interest to discuss your legal options with a seasoned Pittsburgh personal injury attorney.

When you are allowed to spend your insurance money

There are a few considerations when it comes to deciding to keep your insurance money or repair your vehicle. The first is whether you own your vehicle outright or not. If you own your car outright, you are likely free to do what you like with it – including fail to repair it after an accident.

Likewise, you are probably in the clear if your insurance policy does not require you to make repairs with the money. In this case, the contract for insurance only requires the insurer to make the payment. What you do after that is your business.

There are some things to consider even when you are allowed to keep your insurance proceeds. While these factors might not prevent you from avoiding repairs on your vehicle, they could give you pause when making your decision. These factors include:

  • Safety. A damaged vehicle could represent serious safety risks. Even minor body damage could lead to a collision in some cases. Significant damage could limit your vehicle’s ability to absorb impact in a crash.
  • Vehicle regulations. Even if a damaged vehicle is not a safety hazard, it might violate state law. There are specific requirements for vehicles to be road-ready, including no broken windshields or dangling bumpers. If your vehicle does not comply, you could receive a ticket.
  • Future insurance claims. You can only claim this damage once on your insurance. Not only that, but leaving the damage in place could complicate future insurance claims. If you have preexisting damage and then are involved in another collision, the insurance company could claim all of the damage was from the prior accident.

When you are required to repair your vehicle

There are some cases where the choice of using your insurance money to repair your vehicle is out of your hands. If you are leasing the vehicle or have a lien holder, you are likely stuck repairing the vehicle. Most leases and loans include language requiring you to repair the vehicle when necessary and to use any insurance proceeds to do so. When there is a lien on your vehicle, the insurance company typically includes your lienholder’s name on the check. This means you will require their signature before cashing the check.

Another common factor that could require you to repair your car with your insurance payout is the language of your policy. It is common for insurance policies to mandate that you repair your vehicle; in some cases, the insurer will send the money directly to the repair shop.

It is important that you fully comply if your lease, loan documents, or insurance policy require you to repair your vehicle using insurance funds. There could be legal ramifications if you fail to do so, including the potential cancellation of your policy.

Seek the guidance of legal counsel

If you are unsure about how to proceed with your insurance claim, it could be in your best interest to discuss your options with a Pittsburgh car accident attorney. At Chaffin Luhana, we are proud advocates of Pittsburgh residents injured in vehicle accidents. To discuss your insurance claim situation, schedule a free consultation right away.