When You Should Use an Insurance Check for Repairs (and When You Can Keep It)
Insurance is something you probably don’t think much about until you need to use it. This can make your insurance payout—whether for a car accident or damage to your home—feel like money falling from the sky. When you need that money to repair your car or your property so it can be used again, what you’re going to use that money for is a foregone conclusion. But what if you don’t need such repairs, you can handle it yourself, or the damage is cosmetic and you don’t care? Can you just keep that insurance payout?
May be. Unless the damage makes the vehicle unsafe to drive or the home unsafe to live in, or you have the right to fix the situation yourself, there are several scenarios in which you can simply add this check to your account and use it for any purpose. want. But before you start treating that insurance check like a lottery win, make sure you understand the situation.
When can you keep your insurance check?
Whether we’re talking about property or a vehicle, you can usually do the repairs yourself and have your insurance receipt with you:
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You own the property directly, without a loan or mortgage . If you have a loan associated with it, your lender has a say in what happens and will likely require you to make the necessary repairs. The check may even need to be approved by the creditor.
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Your policy does not contain any provisions requiring repairs. Some insurance policies state that repair payments must be used for their intended purpose. Please review your policy before keeping that check.
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Your insurance company does not issue a check to a specific repair organization . Many car insurance companies have repair shops that they partner with, and they may require you to use one of them and pay the repair shop directly.
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Your state does not have rules requiring you to use insurance money for repairs. Your insurer can advise you on this if you are unsure, or you can contact the appropriate agency in your state to find out.
If your situation meets these three points, you can save this nice money for payment and compensate for the damage to your belongings in any way convenient for you.
What Can Happen If You Keep Your Receipt and Skip Repairs?
Just because you can save money on your insurance doesn’t mean you should . Not using this money for repairs can lead to several negative consequences:
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Compromising future claims. If you don’t fix the damage and there is future damage to your vehicle or property, you could be in trouble. If your insurer believes that new damage has been aggravated or worsened by a lack of previous repairs, it may deny future claims.
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Loss of coverage. Your insurer may also stop coverage if you do not repair your property or vehicle. A damaged vehicle or home is more vulnerable to future damage, which could affect your property’s insurability.
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Safety. If you are not qualified to perform the repairs or choose not to do them at all, you could be putting your safety at risk. Cars that have been involved in an accident may have hidden damage or loose components that could fail, and improper repairs to roofs, electrical wiring, or other home components can lead to even greater problems. If you’ve already spent money on something else and then realize you really need to do those renovations, you’ll have to reach into your own pocket to get it done.
The decision to keep your insurance check depends on several factors: the language of your insurance policy, local laws and your own judgment. In many cases, if you need the money for other purposes and you own the insured property outright, you will likely be able to keep the money, but it is not so easy to determine whether you can do so safely.