Much as I believe that insurance companies are scam outfits designed to take as much of your money as possible without giving any of it back…
Given that they’ve agreed to pay for repairs to your vehicle, it seems to me they should be within their rights to do exactly that, rather than just fork over a check that you can use to buy a TV or something.
(I realize this is not a factual answer, but since the thread was moved to IMHO, I’m giving MHO. 
Carry on.)
The key to this question is that the insurance company is not your insurance company (first party). It is the insurer for the guy that hit you. (third party). You have a right to collect from the guy who hit you an amount that would compensate you for all the damage he caused. Of it would cost $2,345.65 to repair the car. That’s what they owe you. They can dispute the amount you claim it would cost (which might be why they want to see the repair invoice.) If there is a dispute, it can be compromised through negotiations or resolved through trial. They have no say, however, in how you spend the money.
I had a Ford Pinto that was nailed while it was parked. The other guys insurance cut me a check to repair it. I did the bare minimum and drove it even more jalopy’ised than it started. It wasn’t like repairing the bits that were damaged would’ve make it “nice”.
They’ve agreed to compensate me for the fair-market price of repairs to the vehicle. Why would they care if I actually spend that money on repairs, as opposed to pocketing the money and repairing it myself (or not repairing it at all)? Why would they want to expend any resources ensuring that that happens?
If you’ve ever had a vehicle totaled, you may have noticed that they don’t force you to buy the exact same car as a replacement; they just hand you a check for the pre-crash fair-market value of your vehicle (and take the burned-out hulk of your car to sell as scrap so they can recoup some of their cost).
My state requires insurance companies to pay the injured party, ie, the owner of the damaged vehicle. They can not force you to fix your damaged vehicle. Back in my days of driving cheap beater cars, I collected for 3 different accidents that were not my fault and never had the vehicles fixed. If you are financing a vehicle, the lender will require the vehicle to be repaired. My daughter was going to pocket the money after her car was damaged in a fender bender. Her lender required her to fix the car or it would be repossessed for not complying with her loan agreement.
I’m actually surprised that you could get a payout and not fix the car. How does the insurance company know they’re not paying for the same damage multiple times?
I do know that when my son had a vehicle totaled (not his fault) he had to surrender the vehicle to get the pay out but could have bought it back for the “salvage value” and repaired it by his own means if he wanted to. It would have had to pass a subsequent safety inspection, however. He didn’t bother to buy it back.
Hmm, I didn’t “surrender” the car, but I did have to agree to cash value less salvage value as the insurance payout. I could also have chosen to surrender the car and gotten the full cash value of the car.
I fixed the car and had some left over. No I didn’t fix it with new parts, I just had the shop pull the rear-end back out to approximately where it belonged. And then I drove it another two years, and sold it for more than the salvage value. 
It’s typically done when it’s not your insurance company that’s paying- but I once had some damage paid for by my collision/comprehensive insurance with a check made out to me. I had to bring the car in for an inspection or they wouldn’t cover any future damage in that area.
Then there is my insurance company that paid out $2100 for body damage. Before fixing it I decided to check the KBB value which turned to be <$500. So my option was to spend the money to get the value of my car up to $500 for trade in on a new one, or lose the trade in and have $2100 toward the new car. I can’t tell you how long I agonized over this decision. No really, I can’t tell if it was more or less than ten seconds. I actually got $200 in trade in anyway. I still don’t understand why they didn’t total the car but then I am not an insurance adjuster.
Seems fair. The lender wants to make sure that if they ever have to repossess the car, they’re getting a vehicle that has the value they expect it to. But that’s the lender enforcing repairs, not the insurance company.
I totaled a car a few years ago while still making payments on it. My insurance company paid the lender directly for the balance of the loan, and I got what was left; I never got a chance to even think about absconding with the entire claim payment.
For starters, the damage you claim to have suffered needs to match up with the circumstances of the accident. If it doesn’t, the insurance company is going to start looking more closely. In these days of digital record keeping, it wouldn’t surprise me if insurance companies can just type in your VIN and see whether they’ve paid claims to you before, and if so, exactly what damage you claimed for this car in the past. If the list of damaged parts in a current claim aligns very closely with the list of damaged parts from a previous claim they paid to you, that might trigger a more detailed investigation.
This is interesting, and contrary to my experience. When I dropped my motorcycle and my insurance company paid my claim for the damage (see post #30), they never followed up to see whether I actually had the repairs done.
If I hadn’t brought it in for the inspection, I don’t know that they would have followed up any further than sending the letter with the check- but I am certain they would have kept a record of the damage they paid for so that they didn’t pay for it again.
Adjusters are very good at their jobs. I was once one of four vehicles in a chain accident, so I had damage to front and rear of my vehicle. The adjuster called me, pointing out that the damage to the front was all on the driver’s side, but there was a single dent on the passenger side front that he couldn’t explain.
I thought about it, then remembered I’d hit a deer months before. It was a small dent that I never even considered reporting or having repaired. A week later I got my Jeep back and it looked great. They even repaired the deer dent. But they canceled my coverage due to excessive claims.