Can you keep insurance money from a car accident?

You can keep insurance money from a car accident, but you must own the vehicle. Drivers still making payments on their car must use the insurance money to repair the damaged vehicle. However, you’ll need the right coverage to get a settlement.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent Brad Larsen

UPDATED: Apr 12, 2022

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Here's what you need to know...

  • Under specific conditions, you can use the money from a car accident settlement on what you want
  • Insurance coverage may be denied if you choose to use car accident settlement money on something other than repairs to your vehicle
  • Car insurance claims work differently based on the type of claim

Have you ever thought about keeping the money from an insurance settlement instead of repairing your car? You can keep insurance money after a car accident, but there are specific conditions you must meet to do that.

So what could they be? Don’t worry — we’ll answer all your car insurance questions about insurance money. 

Read this article to learn how you can use insurance money any way you want. Also, we’ll talk about which coverages can provide an insurance settlement after an accident.

Can you keep insurance money from a car accident?

Yes, you can keep an insurance settlement check if you own the car. If you’re financing your vehicle through a loan or lease, you’ll have to use the insurance money to fix the car. 

However, you could lose your insurance coverage if you decide not to follow through with car repairs. So there’s a risk if you keep insurance money instead of repairing your damaged vehicle.

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How can you keep car insurance money after an accident?

Your insurance company can send money to the repair shop or provide you with a check to cover damages to your car. You can keep the claim settlement money after a car accident if you own the vehicle, but you could get denied insurance coverage if you do.

For example, suppose you receive a check from a collision claim and use the money for something else other than repairs. In that case, the insurance company could remove the collision coverage from your insurance policy. Also, the insurance company may deny you coverage when it’s time to renew.

Car insurance companies want to avoid paying for damages accumulated from a previous claim. In addition to more damage, an insurance company may view using the money on non-repairs as negligent.

Can you keep insurance money from an at-fault driver’s car insurance company?

Yes, you can. Since you’re not a customer, you’re not in danger of losing your auto insurance coverage if you spend your claim settlement money on something outside of vehicle repairs. 

The at-fault driver’s insurance company wouldn’t give you more money if you used your claim check on something else. If the at-fault driver happens to have the same insurance company as you, you could lose your coverage if the company discovers that you spent your claim on something besides vehicle repairs.

Why can’t you keep insurance money after an accident?

Drivers who finance or lease a vehicle can’t keep claim settlement money. Most lenders and leasing companies have contracts where the drivers are obligated to maintain the car. 

You’re under contract to keep the vehicle in working condition, so you must use your insurance money to pay for car repairs.

Can you keep insurance money from a personal injury claim?

Personal injury works differently. You’ll need to show the insurance company your medical bills and how the injuries caused by the car accident affected you.

The at-fault driver’s liability insurance covers personal injury, but you’ll need to pursue legal action against the at-fault driver in some states. However, you can supplement expensive medical bills with personal injury protection, medical payments, and health insurance.

Can I keep insurance money from a total loss car accident?

You can keep the claim check from a total loss accident, but if you’re still making payments on your vehicle, the insurance company will send a check to you and your lender.

If the check doesn’t cover the remaining balance on your loan, you’ll be responsible for making payments until the debt with the lender gets paid in full. GAP insurance can cover what’s left on the loan’s balance.

You can do whatever you like with the claim settlement check when you own the vehicle. Since the car is a total loss, you won’t need an insurance policy. 

If you decide to keep the total loss vehicle with plans to fix it later, the insurance company will give you the car and cut you a check equal to the car’s salvage value. The vehicle’s salvage value is 75% of the actual cash value on average.

Do insurance companies cover salvage cars?

Your insurance company will also give you a salvage title and remove coverage. Insurance companies won’t insure a vehicle with a salvage title, but they can provide liability-only coverage on a vehicle with a rebuilt title.

Rebuilt titles get issued after repairing a salvage car and having it inspected by a licensed mechanic or repair shop. Show your results to an insurance agent and buy car insurance coverage. 

How do car insurance claims work?

Insurance claims are requests to cover injuries and damages after you’ve been in an accident. Claims come in various categories. For instance, a fallen tree damaging your vehicle gets covered under a comprehensive claim.

Contact your insurance company and let them know how your car was damaged. The claim agent determines the type of claim and asks for specifics. After collecting information, the claim adjuster moves the process forward and requests estimates for the damage. 

Gathering quotes for damage costs may take a few days. Some insurance companies may suggest repair shops from their preferred list of mechanics. If you want faster service, use body or repair shops from their preferred list.

If you’ve selected a repair shop, the insurance company sends claim settlement money to the repair shop from its preferred list. Your auto insurance company can send money to the shop of your choice even if it’s not on the list.

You can also have the insurance company write a check in your name. Whatever you decide, do what’s best for your situation.

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How many estimates should I get before filing an auto insurance claim?

Get up to three estimates and present them to the insurance company. The car insurance company will pick the most affordable estimate.

You’ll need to pay a deductible for a collision, comprehensive, or uninsured/underinsured motorist coverage claim after an estimate gets approved.

Liability insurance claims don’t have deductibles.

Pay your deductible, and the insurance company will issue a claim check for repairs. The car insurance company sends you the check, or it can send payment to the repair shop.

When is the best time to report a car insurance claim?

File an insurance claim as soon as possible when an accident causes significant damage to your vehicle. If you wait too long, you could forget important details about the car accident. 

Some minor fender benders aren’t worth an insurance claim. For instance, a small dent on your car may have a lower repair cost than your $500 deductible. However, you should still get an estimate of the damage.

If you decide to file a claim for a minor accident, don’t wait. The sooner you file a claim, the faster you can get your damaged car fixed.

Is insurance law the same in every state?

No, it isn’t. Several states require insurance companies to send claim payments to policyholders and lenders (or lienholders). Meanwhile, some states don’t allow repair shops to charge drivers additional costs for damages.

Keeping Insurance Money from a Car Accident: The Bottom Line

You can keep the money from an insurance claim and spend it on something else. However, you could lose your insurance policy if you don’t repair your car. 

You won’t be under the same pressure if an at-fault driver’s insurance company issues a claim check to you. However, keeping the insurance money for something other than repairs could create more problems for your car.

Keeping the insurance money is helpful in some situations. For example, a total loss accident leaves you without a car and insurance coverage, and an insurance claim could help you put a down payment on a new car.

Consider your options. Sometimes, it’s better to get a new car instead of investing more hard-earned money into an old one.

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