Do I have to repair my car with insurance money?

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Joel Ohman
Founder, CFP®

UPDATED: Jul 17, 2017

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Here's what you need to know...

  • There are different types of coverage that you may be able to file  to pay for claims on your own policy
  • In some scenarios, there may be a deductible waiver depending on your cover and the cause of the claim
  • There may be some lingering issues when you forgo using the check to pay for the cosmetic damage

You buy an auto insurance policy in hopes of never being in a situation where you need to file a claim.

If you do experience a monetary loss, knowing that you do have coverage to pay for your repairs and for other damages will give you the peace of mind that you need to drive without negative thoughts flooding through your mind.

You often question what liability limits or which types of coverage you when you are buying a policy. You might know how much coverage you have, but do you really know how it is used?

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What type of coverage do you need to pay for your repairs?


Before you can even file a damage claim on your personal car insurance policy, you need to be sure that you understand what type of coverage is required.

If you do not carry the right coverage on your own insurance, it is possible that you will never even see a payout for those dents, scrapes or dings.

Here is a breakdown of the types of coverage and what scenarios they may pay in:


Comprehensive is a form of physical damage coverage that will pay for specific repairs to the covered vehicle.

This type of coverage pays for losses that are caused specifically by perils such as:

  • Fire
  • Theft
  • Vandalism
  • Falling objects
  • Explosions

The only time comprehensive pays when a car is being driven is when you collide with a live animal. Without comprehensive, repair bills will turn into out-of-pocket expenses for any of the types of claims above.


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Collision is the second form of physical damage coverage that pays when your vehicle collides with any other object.

It is most commonly used when you are at fault in an accident, but can also be used to pay when you are not at fault and the other party does not have coverage.

In order for either collision or comprehensive to be used, damage must exceed your deductible.

The deductible amount will be subtracted from your payout disbursement.

Uninsured Motorist Property Damage:

Comprehensive and collision are often the only two types of damage coverage that are focused on, but you may also purchase Uninsured Motorist Property Damage (UMPD) to cover a vehicle that does not hold much value.

UMPD will pay for your damage repairs on a vehicle without collision.

The maximum payout is $3500 and the accident must have been with a driver who did not have liability insurance.

If you are hit by an uninsured driver, having UMPD helps you recover without paying for thousands of dollars of repairs without any help.

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When is cashing a repair check an option?

Some companies issue payment that essentially reimburses the policyholder for their damages and others will pay the repair facility directly.

If you have strictly cosmetic damage that is not affecting the mechanical operations of your claim, repairs might not be a priority. You might want to take the money to catch up on bills, go on a vacation, or put away for a rainy day.

Whether or not taking the cash following a claims payout is an option depends upon how your carrier handles a claim and what is written into the contract.

Here are some things that you can look for:

Claims Payouts are Made Direct to the Repair Facility

Some companies have affiliate repair shops and partner programs where you are required to do business with a specific facility to keep rates low.

If you are with a carrier that pays directly to the repair shop that they recommend, you will not see a check.

Remember, you do not have to go to preferred shop if it is not in your contract. This could help you avoid any direct payment problems.

Claims Payout is Made to Your Lender

If your vehicle is financed or leased, the insurer will more than likely issue the claims repair check to the loss payee and not directly to you.

The check then must be signed by the company before it can be cashed. The lender may write a check directly to a shop so that you are required to do repairs to their asset.

Are there issues with opting to cash a repair check?


You should be aware of the issues before you make the choice to live with that unsightly dent.

Here are some of the challenges that could appear later down the line:

  • You may be in violation of your loan contract if you opt not to report or repair damage when the vehicle is financed
  • Failing to repair damage could reduce the value of your car if you file another claim because of the pre-existing damage
  • Your company may question further damage if you have another loss
  •  You may not have the option to keep physical damage on your policy

You really need to consider the pros and the cons of using the money for something other than a damage claim.

The money may help, but there might be some unexpected issues that you would have never expected when you made the decision to live with the scrapes and dents.

If you are not happy with your insurer, it is time to shop around. Use an online quoting tool, compare the costs, and then you can switch to a company with better claims practices.

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