Auto insurance query: Take payment in lieu of repairs?

Just looking for a range of opinions here people, and understanding that this is opinion and not professional advice…

Last week, someone backed into my wife’s car (in the DMV parking lot, of all places! :stuck_out_tongue: ) and put a decent sized dent in the rear area of the vehicle. The agent of the insured came and assessed the damage and came up with a figure for repair which seemed reasonable. My query: anything improper about accepting said payment in lieu of having the work done? The car will be paid off in three weeks, and is in pretty good shape, but I’m not terribly inclined to replace and repaint a whole panel to make a car pushing 100K look perfect in one area. Anyone have a similar experience? I don’t really see any legal issues–the insured damaged my vehicle; the insurer offered a specific amount for the damage; and I can live with the way it looks. Understanding that regs vary from area to area, is there any issue here?

Thanks in advance for any input!

My Dad’s pickup truck got caught in a big hail storm. It looked like a kid went all over the truck lightly hitting it with a ball pen hammer. He took a cash settlement and did not have the truck repaired. The insurance company knew that was what he was going to do and did not have any problem with it.

The only real risk would be if the vehicle is totalled in another accident sometime in the near future. You will be compensated for a damaged, not a complete car and will receive only a portion of what the vehicle would be worth without the damage. My wife was rear ended about 4 years ago, this was about a year after the car was involved in a minor fender bender. Before the other insurance company would pay the full value of the car, we had to provide proof that the previous damage had been repaired. In our case because we had the car repaired, we received almost $3000 more than if the car had not been repaired.

There isn’t anything unethical about it. You would get less for the vehicle if you sell it right away. You also have to live with the damage. I think the only time it is a real problem is when the damage makes the car unsafe to drive either now or for someone else down the road.

Consider ethical implications if the vehicle is being financed.

Can you elaborate? I don’t see how the car was paid for changes the situation in any way?

Recently, my car was totalled in a hail storm. I was offered one amount of cash if the insurance company kept the car, and a lesser amount if I kept it. However, the insurance company would only offer me liability insurance on the damaged car after that. I’d say there was no ethical problem, because my agent urged me to take the lesser amount and keep the car, pointing out that I could resell it as a fixer-upper for more than they were willing to give me.

Thanks for the responses so far, folks.

The vehicle will be paid off in two weeks–which is before any repairs would be made anyway, so the financing end is a non-isssue. Given the age of the car (it’s a 2000) and the mileage, I just don’t see the point of restoring one portion of it to pristine condition. I’d rather bank the payment in anticipation of the inevitable $500 brake or tie-rod job.

I assume you are implying that not repairing a financed vehicle puts the lienholder at risk because the collateral is worth less than it would otherwise be? Not a problem, they have already thought of this and a fix is in place to protect the lienholder. I won’t go into details because that would be a major hijack. But the only way for a lienholder to suffer an actual loss is for them to repossess the vehicle and find that it has been damaged prior to the repo. This type of loss is settled fairly between the insurer of the car and the lienholder. Noi worrios I assure you, cry not for the bank! A lot of times an insurer will put both the car owner’s name and the lienholder’s name on the settlement check. That way the car must be repaired before the lienholder signs off on the check, or the lienholder agrees to allow the car to go unrepaired. … yeah, that was the short version!

The OP situation is called a “cash settlement” and is completely above-board. In the event of a total loss later on, the OP will be paid the market value of his car and the prior damage will be taken into consideration. Basically, “what could he have sold the car for before the total loss accident happened?” The extent of any prior damage deductions will depend on things like the age of the car, expected condition of an “average” car of the same year/make/model, etc. For instance, hail damage on a new car is going to be looked at a lot more seriously than hail damage to a 15 year old car because, let’s face it, who buys a 15 year old car because they want to look good rolling down the road? It’s a grocery getter, and hail isn’t going to impact its value as such in any significant way.

There’s nothing wrong with a cash settlement. In fact, if you cash settle, take your car to a shop and get going on repairs, and the shop identifies additional damage related to the accident but that was not on the original estimate, your claim can be re-opened and additional monies issued for the new damage. After all, the insurer can only estimate the damage that can be seen, right?

It’s fine. Go for it.

I once drove a Ford Escort shudder that was a mess. In the final years of its life, it was hit 3 times. Each accident was entirely the other parties fault. Each accident wound up with me getting a check for >1,000 / <2,000. In each case I went to a wrecking yard and for $50 or so I got what I needed to make the car legal. Talk about a love/hate relationship!