What Can I Do With My Car Insurance Claim Check?

Quick Answer

Yes, you may be able to keep the check from your insurance payout without fixing your car, but first you’ll have to make sure you satisfy any lienholder requirements.

An automobile insurance document is under a stack of cash and a set of car keys.

You may be able to keep an insurance payout rather than use it for repairs when you file an auto insurance claim, but it depends on a few factors, such as whether you have a loan or lease on the car.

If your car is damaged in an accident or event such as a hailstorm, your insurance company will likely cut a check to pay for repairs (minus your deductible). But who receives that check depends on whether you own the car outright or finance it. It may go to your lienholder if the car is financed, your mechanic or body shop once repairs have been agreed upon or directly to you. If your insurance company pays you directly, you may have some wiggle room on what to do with the money.

How Car Insurance Payouts Work

When a car is damaged, the insurance provider will look it over and provide an estimate for the total cost of repairs. Depending on the insurer's policies, you may have the option to receive this payment as a check or electronic funds transfer, or have the insurer pay the mechanic or body shop directly. If the suggested repairs are purely cosmetic, you may choose to accept the check from your insurer and live with a dented door or scratched paint.

If you have a loan or lease on your car, the insurance company will likely issue a check addressed to both you and the lienholder for car repairs. Lienholders have a vested interest in your car being in good shape, so they will most likely require you to use the insurance payout to repair your car.

You'll need to have the repairs completed and then send proof of repair to the lienholder before they will sign the check over to you or the auto repair shop. With a leased vehicle, there are likely stringent repair requirements, such as only using factory rather than aftermarket parts.

Should You Pocket Your Insurance Payout?

If your car suffered serious damage that could make it hazardous for you to drive, it's important to repair it to help ensure your safety. Likewise, if the car is drivable but the damage is likely to cause problems down the road, you should use your payout as intended.

If you own your vehicle and the repairs needed are purely cosmetic or won't affect how the car operates, however, you may choose to put your payment to other uses.

Some strategic ways to use your payout to put you on more solid financial footing include:

Keep in mind that your rates may go up after making a car insurance claim, so carefully consider filing a claim if you only stand to gain a small payout.

The Bottom Line

If you are about to receive a payout from your car insurance company for repairs on your vehicle, it may be tempting to keep that money. But you should only consider doing so if you have the legal right to refuse repairs and can live with the minor damage to your car without causing problems to worsen.

A simpler way to save money on car costs may be to find a better car insurance rate. With Experian's auto insurance comparison tool, you can get quotes from up to 40 top providers in minutes that are comparable to your current plan, so you'll know if you've got the best deal.