This is probably something everyone knows, but I’ve never been in this position before.
Long story short: some lady backed into me in a parking lot. I took the car to the insurance company body shop, and they quoted me $950. Her insurance cut me a check for the $950 already.
But, the car is almost paid off, and the damage is mostly cosmetic (cracked light fixture and some body damage). I’d much rather keep the $950 than spend it on a minor repair to a car I’m planning on driving into the ground over many years. Can I just keep the money? Seems like I should be able to, but I don’t want to ask the insurance company in case what I am suggesting is illegal and they think I am scamming them.
Does it matter if the car is paid off or not? Will there be complications if I get hit in the same place in the future with pre-existing damage?
Thanks for any replies and sorry if this is a dumb question.
It’s yours to do whatever you want with. You might think of insurance not so much as a means to fix things, rather as compensation for your loss. You can use that for repairs or as an adjustment for the decreased value of your property.
We did this a few years ago when one of our cars got caught out in a hailstorm. All the damage was cosmetic, and we didn’t care enough about the car to want it fixed. Our insurance company told us that it was fine not to fix it, but if any more cosmetic damage ever happened to the same bits of the car, it would not be covered. Fine with us!
If the cars not paid off it could be a problem. They require it be fully insured and expect damages to be repaired. On the other hand they have no reason to investigate or take action so long as the loans still getting paid. If you defaulted on the loan they could come after you for the $950 as well.
In my youth I had a run of luck. Three wrecks in a row where someone hit my car without any fault on my part. Each time I pocketed the cash and hammered out/junk yard parts for the repair.
Would the $950 pay off the car? If it would and the damage is purely cosmetic, that’s what I’d do.
I owned a 1988 S10 that seemed to have a big sign on it that said “HIT ME”. The first time it was totaled, the damage was merely cosmetic, so I paid the remaining two payments with the insurance money and kept the rest. The second time it was totaled, I fixed the exhaust system that was damaged, but skipped the body damage (on a vehicle that old, it doesn’t take much damage to total it). I used the insurance money to put a down payment on a second vehicle, while keeping the old truck.
Someone else’s insurance company really doesn’t care what you do with the money. They are simply paying you for the damage done by one of their clients. As mentioned above, your financial institution and insurance company may have issues though.
It isn’t really your car yet, it belongs to the bank/lender. If your insurance company had paid the claim they would have reported it to the lender or even included the lender as a co-signer on the check. Since it was paid by the other party they don’t care and are leaving it up to you to deal with the bank.
Examine your loan papers. You are usually required by the bank to maintain full coverage insurance for the term of the loan to protect the bank’s asset value and to maintain the vehicle in good working order and repair.
Banks routinely run insurance checks on their assets, be they cars or homes, so they will know if you drop insurance coverage. One of these checks may reveal the accident report that the other party must have made in order to pay the claim.
Unless you are very close to paying off the car you could end up with some explaining to do to your lender.
Is it really? If he would sell it today, should he expect about $950 less than what he could’ve sold it for prior to the accident?
Note that I am NOT quibbling about the rules. If the insurance company rules are that one may keep the money, I’m totally okay with that. I’m just trying to fine-tune the logic that is used to make up such rules.
My guess is that the difference the car’s pre-accident value and post-accident value is a lot less than $950. Heck, if the pre-accident value had been $1000, would it now be $50? I don’t think so.
(If the pre-accident value had been $900, the $950 repair bill would have caused the insurance company to consider it totalled, and offer the policyholder a check for $900, so different logic would apply.)
The insurance company really doesn’t care, but you could be in for a surprise when it comes time for inspection. I had what I thought was a cosmetic issue on a car door some years ago. It closed just fine but the edge was out of alignment with the body and the inspector failed it because of that.
And I think you may not pass inspection with a cracked light fixture.
Ah, this is a very good point, one I hadn’t even considered. I don’t think my state does car inspections anymore (to save money) but I’ll bet it could be a ticketable item if I get pulled over. Especially if it’s the Rock.
This I don’t understand. If your vehicle is damaged to the point it is “totaled” that means the insurance company says the vehicle no longer has any value and compensates you for the complete loss. How can you then continue insurance on that vehicle when the insurance company has written it off? Your vehicle cannot be insured if it no longer has value (not to you but to the insurance company), unless you drop the old insurance and seek out a different company. At that point, the word “fraud” is most appropriate. If the new insurance company fails their due diligence and insures your vehicle, while they may wear their decision, you still could be considered committing fraud.
Are you really talking “totaled” in the honest sense of the word?
Your car was TOTALED TWICE, and you still were able to drive it? Was it totaled twice by the same insurance company?
Something isn’t quite right with that reasoning. I was under the impression that if a vehicle were considered totaled, DMV is notified and the car cannot be legally registered, and that technically, the ownership of the car transfers to the insurance company.
~VOW
I’m not sure how it works but there are a lot of totalled cars on the road. The insurance company sells them or lets the driver keep them (I’m sure they pay them less for their loss if they want to keep the car) or even pays the owner for the loss then the owner buys it back from them for cheap. They get “salvaged” titles, and there are some pretty nice looking cars with salvaged titles where someone obviously spent a little effort to fix them. They still have that salvaged title though, and they’re worth considerable less than one with a clear title.
There’s a difference between “total” and “salvage”. If my car worth $1500 is damaged to the extent that the insurance adjuster decides it will cost $2000 to fix it, the insurance company declares it a total loss, and either pays me the $1500 the car is worth ,keeps the car and sells for salvage value or allows me to keep the car and pays me $1500 minus the salvage value . If I can fix the car for less than the insurance payment ( maybe the damage is cosmetic and my brother owns a body shop ), I can bring it for an inspection at the insurance company and they will determine if the repairs restored the car to the previous value. If so , it will be covered to the same extent it was before the accident. If not, there may be some exclusions from future coverage.
If I don’t repair the car, I will drop the collision and comprehensive, as there is little value left to insure. If another person then rear-ends me, his or her insurance company will determine how much the new damage will cost to fix and compare that to the total value of the car before the latest accident and the rest proceeds as above
I would not drive around with a cracked tail light. You’ll get pulled over and ticketed.
Go to an auto salvage yard. One of those U Pull It deals and bring a screwdriver. The chances are good they’ll have a wrecked car that’s the same model. Get the tail light off, and pay the salvage yard a few bucks. Fix your tail light yourself.
This is pretty much what went down. The first time it was totalled, I still owed two payments on it. Since it wasn’t my insurance company that was paying out, I took the book value minus the salvage value, paid the last two payments and dropped my insurance coverage down to liability. My insurance company then didn’t have to pay out on my vehicle in case of an accident that was my fault, so they really didn’t give a flip one way or another what kind of body damage was already there (the damage was confined to the tailgate and driver’s side rear quarter panel on the bed of a pickup). Since it ran just fine, was relatively low mileage and nothing was flying off or dragging at highway speeds, I kept on driving it. My state doesn’t do vehicle inspections beyond emissions.
Six years later, an old man tried to run over it when it was parked at the supermarket. Once again, no insurnance claims to my insurer. His insurer cut me a check for book minus salvage. That time, there was just a little exhaust damage, so I fixed that and had ~$800 to sock in the bank. I drove the truck for another five years.