Author Topic: Pocketing A Car Insurance Check After A Minor Accident  (Read 5695 times)

acepedro45

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Pocketing A Car Insurance Check After A Minor Accident
« on: February 29, 2016, 09:14:07 AM »
Our cheap, fully paid off Mustachian car was hit while parked. The other driver slowly backed into our car, broke the plastic off the tail light and left a dent in the body. All the damage is purely cosmetic and there is no exposed metal to rust or anything to worry about.

Today I got an estimate of $1,400 from the repair shop to fix the damage. Body work is some kind of racket! For some perspective, I doubt our car was worth more than $2,500 even before this mishap.

If I really get a check for $1,400, my inclination is to just pocket it, replace the tail light myself for $39 and live with one more dent in the car. Is that allowed?

The only drawback I can see is that if someone else hits the car and wrecks it later, I would get a payout that is reduced by $1,400. But that doesn't seem like a big deal at all to me.

I looked around for information on the web to see if this was kosher, but most of the articles were written from a Consumer Sucka perspective. They all suggested that pocketing an insurance check could be considered defrauding the bank that was inevitably financing the car. The articles seemed unable to even contemplate a situation where a person could own the car outright.

Any experience with this kind of situation, Mustachians?

Jacks flunky

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #1 on: February 29, 2016, 09:23:12 AM »
I had this situation with one of my parents' cars, where someone pulled out, then stopped in the intersection when she saw me (she had a stop sign, me not). The drivers side front quarter panel and headlight were destroyed. Insurance totaled the vehicle, but my parents elected to keep the car and take the insurance check minus the junkyard price (since the insurance company want getting the car). A "new" panel came from the junkyard. I think we put $100 into fixing it for a $1.5k check.

Typed on my phone. Pardon the autocorrect.


terran

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #2 on: February 29, 2016, 09:27:41 AM »
My insurance agent has told me this is perfectly fine and I've done it. Your car is now worth less, so you should be compensated whether you fix it or not.

jackiechiles2

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #3 on: February 29, 2016, 09:43:51 AM »
I definitely did this.  I had a Saturn SL1 that was worth like $1200. It got hit from behind and I got a check for $600 for the bumper.  Since those saturn bumpers just pop right out, I popped it back out, reattached some plastic bolts, cashed the check for $600.  Like two years later, it got hit from behind again.   I got another $600 for the bumper.  Kept the bumper again.   Car was almost making me money by the time I got rid of it.

merula

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #4 on: February 29, 2016, 10:02:17 AM »
My insurance agent has told me this is perfectly fine and I've done it. Your car is now worth less, so you should be compensated whether you fix it or not.

This is correct. You have suffered damages, and the $1,400 is compensation for those damages.

The only drawback I can see is that if someone else hits the car and wrecks it later, I would get a payout that is reduced by $1,400. But that doesn't seem like a big deal at all to me.

This is not necessarily correct. Let's say you get hit today while still considering this decision, and your car is totaled. The adjuster isn't able to say exactly how much your car was worth 30 seconds before the accident, they just have to go with "It's a 2000 Cheapo Rustbucket with 300,000 miles, which is worth $XXXX." So they pay you $XXXX.

LeRainDrop

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #5 on: February 29, 2016, 10:03:08 AM »
Yup, there's no problem with receiving the insurance pay-out and then not fixing the damage, if that's what you choose to do.  A couple things first:  (1) Was the $1,400 estimate from your insurer's choice of body shop?  Insurance typically will pay based on the estimate of one of their approved adjusters only.  (2) Do you have a deductible?  Don't forget to subtract that from the estimate to calculate the amount you will receive.  (3) After putting this behind you, you should look at your insurance coverages and figure out if you are over-insured on this car, especially since you say this is an old/low-value car.

ETA:  As merula just pointed out, the deductible does not apply in your situation because you are getting reimbursed by the other driver's insurance company.
« Last Edit: February 29, 2016, 10:06:55 AM by LeRainDrop »

merula

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #6 on: February 29, 2016, 10:04:14 AM »
Yup, there's no problem with receiving the insurance pay-out and then not fixing the damage, if that's what you choose to do.  A couple things first:  (1) Was the $1,400 estimate from your insurer's choice of body shop?  Insurance typically will pay based on the estimate of one of their approved adjusters only.  (2) Do you have a deductible?  Don't forget to subtract that from the estimate to calculate the amount you will receive.  (3) After putting this behind you, you should look at your insurance coverages and figure out if you are over-insured on this car, especially since you say this is an old/low-value car.

Deductible does not apply to damages paid by the other person's insurance company.

LeRainDrop

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #7 on: February 29, 2016, 10:05:40 AM »
Yup, there's no problem with receiving the insurance pay-out and then not fixing the damage, if that's what you choose to do.  A couple things first:  (1) Was the $1,400 estimate from your insurer's choice of body shop?  Insurance typically will pay based on the estimate of one of their approved adjusters only.  (2) Do you have a deductible?  Don't forget to subtract that from the estimate to calculate the amount you will receive.  (3) After putting this behind you, you should look at your insurance coverages and figure out if you are over-insured on this car, especially since you say this is an old/low-value car.

Deductible does not apply to damages paid by the other person's insurance company.

Shoot, you're right.  I responded too quickly.

acepedro45

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #8 on: February 29, 2016, 10:33:00 AM »
Thanks for all the replies. I feel better and better about leaving the dent as is.

Quote
Quote from: LeRainDrop on Today at 10:03:08 AM
Yup, there's no problem with receiving the insurance pay-out and then not fixing the damage, if that's what you choose to do.  A couple things first:  (1) Was the $1,400 estimate from your insurer's choice of body shop?  Insurance typically will pay based on the estimate of one of their approved adjusters only.  (2) Do you have a deductible?  Don't forget to subtract that from the estimate to calculate the amount you will receive.  (3) After putting this behind you, you should look at your insurance coverages and figure out if you are over-insured on this car, especially since you say this is an old/low-value car.

(1) I had an independent shop examine the car and come up with the $1,400 estimate (although it was picked at random from Google based on convenience) so I am still waiting to hear if the insurance adjuster will actually pay the $1,400 or will dicker.

(3) I have never carried collision/comprehensive coverage for this car since I could afford to replace it pretty easily (albeit with a grimace) if I crashed into a telephone pole.

Quote
Quote from: acepedro45 on Today at 09:14:07 AM
The only drawback I can see is that if someone else hits the car and wrecks it later, I would get a payout that is reduced by $1,400. But that doesn't seem like a big deal at all to me.

Quote
This is not necessarily correct. Let's say you get hit today while still considering this decision, and your car is totaled. The adjuster isn't able to say exactly how much your car was worth 30 seconds before the accident, they just have to go with "It's a 2000 Cheapo Rustbucket with 300,000 miles, which is worth $XXXX." So they pay you $XXXX.

That is good news. In my mind, if and when I sell the car, I don't think the conversation will go, "I will give you $2,000 for this car. Oh wait, there's a dent in the back corner. Make it $600 instead."

mandy_2002

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #9 on: February 29, 2016, 10:44:02 AM »
Thanks for all the replies. I feel better and better about leaving the dent as is.
...
Quote
This is not necessarily correct. Let's say you get hit today while still considering this decision, and your car is totaled. The adjuster isn't able to say exactly how much your car was worth 30 seconds before the accident, they just have to go with "It's a 2000 Cheapo Rustbucket with 300,000 miles, which is worth $XXXX." So they pay you $XXXX.

That is good news. In my mind, if and when I sell the car, I don't think the conversation will go, "I will give you $2,000 for this car. Oh wait, there's a dent in the back corner. Make it $600 instead."

A friend of mine was hit at a blind 4 way stop a few weeks ago, and her car was totaled.  She had a small dent in the front fender opposite the accident from a previous issue with the car.  Farmers Insurance (the other guys plan) removed the value of that dent from their payout.  Is that legit?  I don't know.  She accepted it as fair, but she probably could have fought it, especially considering that just about every comparable car they sent her for their estimate had a similar dent on the passenger side. 

mtn

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #10 on: February 29, 2016, 10:50:52 AM »
Yes, it is fine to take the check and not do anything to the car.

Some anecdotes:
Grandpa-in-law had an Oldsmobile that had significant cosmetic hail damage. He took the check, and renamed the car "Dimples".

We had a truck that was backed into in a parking lot. Took it to 3 places the insurance company told us to (same insurance company for us and the at fault driver) and they gave us the average of the 3 estimates. We pocketed the check, and took the truck to our friend who did work on the side. Made $1,200 on the deal (insurance gave us $1,800, guy charged us $400, we gave him $600). That truck was worth about $3,500 according to the insurance company; we could have had it totaled if we wanted to but instead just had it fixed (not a rebuilt title or anything--title was still clean).

My wife got in an accident with her car. Cosmetically, it needed a new bumper, hood, headlight, and maybe some work on the front fender. Underneath, everything was broken--radiator support, headlight support, windshield washer fluid resevoir, etc. We had been driving the car for a month before we finally took it in to get fixed. The car was worth about $3,500 in my estimation. The cost to fix it was $3,300. Insurance valued the car at $4,500. The shop, with the blessing of the insurance company and us, found more stuff that needed to be fixed from the accident (stuff that would have been fine and they were trying to keep our cost down since we didn't initially involve insurance). This let them total the car and we got the check. We had the option to buy the car back for $2000, but it didn't make sense to us when we worked it out with everything--but we were close to doing it.

sol

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #11 on: February 29, 2016, 10:58:40 AM »
You purchased insurance for precisely this reason, so that you would have the option of repairing the car or pocketing the check.  You paid thousands for the privilege of having somebody else bear the risk of damages, and it would be silly to forego your good fortune by not pocketing the money.

Every time an insured vehicle gets damaged, you win!  (And this is why insurance fraud is so common.)  Since your car was legitimately damaged, collect your winnings and move along.

StacheInAFlash

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #12 on: February 29, 2016, 02:58:35 PM »
I was rear ended in my 25 year old beater, snapping the steel bumper. The guy's insurance company came and looked at, approved a payment of close to $1000! I pocketed the money, and a few months later tracked down a salvage yard bumper for $50, and made $950. Definitely a perk of driving an older vehicle.

Tjat

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #13 on: February 29, 2016, 05:19:41 PM »
I work in insurance and let me say, of course this is allowed. Your insurance company has a duty to "make you whole" following the accident. A dented car is a loss, but your insurer doesn't care if you repair it with the money or pocket it. I did the same thing last year and pocketed $1500

sol

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #14 on: February 29, 2016, 07:44:58 PM »
I did the same thing last year and pocketed $1500

I pocketed $5750 for totalling a motorcycle that I only paid $4100 for, in about 2006.  Of course, my medical bills were north of $30k so it's not exactly like I came out ahead on the deal.  Plus I got some bitchin' arthritis out of the deal, so that's like a bonus.

StacheInAFlash

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #15 on: March 01, 2016, 06:51:43 AM »
I work in insurance and let me say, of course this is allowed. Your insurance company has a duty to "make you whole" following the accident. A dented car is a loss, but your insurer doesn't care if you repair it with the money or pocket it. I did the same thing last year and pocketed $1500

But doesn't the bank care, if you have a loan on the vehicle that is? I haven't been in that situation before, but aren't you required to repair the vehicle if the bank has title to it? It is the collateral for which you put up in order for the bank to loan you the money, so I think they want to know you're not pocketing money while leaving the collateral damaged. Maybe not?

merula

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #16 on: March 01, 2016, 08:46:18 AM »
I work in insurance and let me say, of course this is allowed. Your insurance company has a duty to "make you whole" following the accident. A dented car is a loss, but your insurer doesn't care if you repair it with the money or pocket it. I did the same thing last year and pocketed $1500

But doesn't the bank care, if you have a loan on the vehicle that is? I haven't been in that situation before, but aren't you required to repair the vehicle if the bank has title to it? It is the collateral for which you put up in order for the bank to loan you the money, so I think they want to know you're not pocketing money while leaving the collateral damaged. Maybe not?

Possible, but how are they going to know? You owe the bank for the loan; if they repossess the car and it's worth less than the loan, you still owe them.

And in the OP's case, there's no bank involved.

maco

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #17 on: March 01, 2016, 08:49:49 AM »
I work in insurance and let me say, of course this is allowed. Your insurance company has a duty to "make you whole" following the accident. A dented car is a loss, but your insurer doesn't care if you repair it with the money or pocket it. I did the same thing last year and pocketed $1500
After a sewage flood in my basement, insurance paid for the ruined wall to wall carpet. Carpet in a basement sounded stupid to me, though, and there was ceramic tile underneath, so I had the tile & grout deep-cleaned and put the leftover cash toward replacing the dead air conditioner.

dcozad999

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #18 on: March 01, 2016, 08:58:40 AM »
I work in insurance and let me say, of course this is allowed. Your insurance company has a duty to "make you whole" following the accident. A dented car is a loss, but your insurer doesn't care if you repair it with the money or pocket it. I did the same thing last year and pocketed $1500

But doesn't the bank care, if you have a loan on the vehicle that is? I haven't been in that situation before, but aren't you required to repair the vehicle if the bank has title to it? It is the collateral for which you put up in order for the bank to loan you the money, so I think they want to know you're not pocketing money while leaving the collateral damaged. Maybe not?


Actually they do care. In my case, since I had a loan against the car, I could either get the check written to the auto body shop, or to the lien holder which would then pay down the principal. I did not have the option of pocketing the check myself. YMMV.


In the OP's case, they own the car outright. They have every right to pocket the money as the car is, supposedly, devalued by the amount of the payout.

Tjat

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Re: Pocketing A Car Insurance Check After A Minor Accident
« Reply #19 on: March 01, 2016, 10:41:31 AM »
I work in insurance and let me say, of course this is allowed. Your insurance company has a duty to "make you whole" following the accident. A dented car is a loss, but your insurer doesn't care if you repair it with the money or pocket it. I did the same thing last year and pocketed $1500

But doesn't the bank care, if you have a loan on the vehicle that is? I haven't been in that situation before, but aren't you required to repair the vehicle if the bank has title to it? It is the collateral for which you put up in order for the bank to loan you the money, so I think they want to know you're not pocketing money while leaving the collateral damaged. Maybe not?


Actually they do care. In my case, since I had a loan against the car, I could either get the check written to the auto body shop, or to the lien holder which would then pay down the principal. I did not have the option of pocketing the check myself. YMMV.


In the OP's case, they own the car outright. They have every right to pocket the money as the car is, supposedly, devalued by the amount of the payout.

My post was specifically aimed from the insurers point of view. Any loan obligation you are bound to regarding vehicle repairs is between you and your lienholder. From my experience though, the lienholder only really cares if the vehicle is totaled or in the event they repossess. Either way, you owe them the outstanding principle on the loan, regardless if the repairs are made.