Car insurance claim question?

Yes, if the insurance company issues you a check directly, you are free to do what you choose with it.

The answers about insurance fraud are wrong. Once you get the check and release them from liability they don't care what you do with the money. If they totaled your car it wouldn't be fraud if you chose not to buy a new car either.

The only instance where you might get in trouble is if you still owe on the car, in which case the check would likely be in yours and the lienholder's name.

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I agree somewhat with the first answer, but I also know there are lots of situations were this might not apply. Technically it could be illegal, but if you call the at-fault person's insurance company and they are covering it, they may just offer you X amount of money for 'pain and suffering". You'd need to read the release form carefully, but I don't think that obligates you to actually spend that money on your car. Basically it's a form used by companies to let themselves off the hook, and by accepting the money you acknowledge that they are no longer liable for anything. With such a minor accident, they may not even do this.

I was once hit and had knee pain from sliding forward into the steering column. Since the person who hit me didn't have insurance, my company had to cover the costs (and I had to foot the deductible). They paid for the car, and since my injuries appeared to be minor, they offered me $1000 for compensation. Since I was pretty sure I would have no lingering health problems from this situation, it worked out well for me (covered the deductible plus some).

My sister was once rear ended and the at fault party did the same thing and offered a cash settlement. She planned on using it for repairs, but her car was totalled in another unrelated accident that same month. So she actually made money. And my mom's car was damaged by hail this summer and her company just wrote her a check. They found hail damage in places we couldn't see so naturally my mom asked if she had to repair what they said they saw with the money and the insurance adjustors answer was no, she didn't have to have anything repaired!

Insurance companies will often pay the body shop directly, but it's worth asking about. I wouldn't lie and I wouldn't misrepresent what you plan on doing, but if they give you the money directly and don't include any contract that requires you to actually get the repairs, then I think what you want to do is completely legal and somewhat common.

Good luck

My initial reaction would be to think that it's not legal...

...however, on second thought, it occurs to me that the payment is a compensation for your loss (i.e. for the damage), which could alternatively be recovered directly from the person who caused the damage, and which does not require a loss of liquid assets (but rather the loss of value in your vehicle) in order to be recoverable. Whether you pay for the repairs or not, you've still suffered a loss, and are entitled to recover for that loss. (Basically, your insurance company will get reimbursed by the other guy's insurance company, and the other guy's insurance company is paying out on the basis of his own liability to you, which exists regardless of any actions you take to repair the vehicle.)

To put this into a clearer context: If your car were totalled, you would have no obligation to use the insurance money to replace it.

That said, I just checked my jurisdiction's Insurance Act, and it states that the insurer has the right to choose to repair or replace the damaged object, rather than compensate for the damage. Thus, assuming that this clause is common across jurisdictions, it would depend on your insurance company's position. But in the end, it seems that, if an insurance company pays money to the garage, they're exercising their option to repair the car. If they issue the cheque directly to you, then there would have to be strings attached on the payment (or in your insurance policy) to require you to use it to make the repairs. It doesn't strike me that there's any reason why you should be *automatically* required to repair the car to be able to recover for the damages.

On the other hand, it also doesn't strike me as particularly likely that you would just ask for a cheque and that they would give it to you with no strings attached.

No it isn't legal. Lots of people do it, but it isn't legal. It is Insurance Fraud. There are many state statutes about this. This is why most insurance companies will NOT issue the payment directly to you, but instead make you take your car to an "approved" repair place and then the insurance pays them directly.

People do this all the time. You simply settle out of court, and cash the check, spend it on whatever you want.

The other guy is pretty screwed though. He might get prosecuted for felony hit and run. It might not be easy to collect, but you can try.

Most insurance companies cut the check to the repair shop. Hard to convince them to cut it to you without creating fraud.

No this is not legal. It's called insurance fraud and my advice to you is not to mess with insurance company's and there money. Car insurance is for your "car".