Repair the Car or Spend the Cash?
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Marc van der Chijs Over the past few months, I've been seeing cars in various states of disrepair. Big dents, dings, damaged windows and doors, bumpers scraping along the ground, you name it. And it got me scratching my head and wondering...are people choosing to take the insurance money and spend it on something other than the car repair? (See also: Remove Car Dents Quickly and Cheaply)
Now obviously, some of these cars were just old and in need of some major TLC. But in the company car park alone I've seen several cars that are from 2007 or after, and they have big bad dents and other major pieces of bodywork damage.
Clearly, these cars were involved in some kind of accident. Be it with another car, a lamp post, a wall, or an angry Transformer, something went wrong. Knowing that most good citizens have auto insurance coverage, I also know that these people would have received some kind of payment to have the car fixed whether it was their fault or not. I got sideswiped a few years ago, and the car took $4,500 worth of damage. I was given two options...choosing a recommended repair shop to deal directly with my auto insurance company, and I would pay the deductible. Or I could get a check based on the price the adjuster believed it would cost to have repaired, minus the deductible.
At the time, I chose the first option. I needed the car fixed immediately. I wasn't ready to start calling around for competitive bids, and I also knew that the place chosen by my auto insurance company would be held accountable by them if the repair was not done well.
But I got to thinking. I wonder...
How many say "I can live with the dent; I'd much rather have the cash"?
It makes all kinds of sense to me. Some people don't care about the resale value of the car or how it looks. It's a mode of transport that gets them from home to work, shopping, or the ball game. It's no big deal if it's not perfect, and a few thousand dollars is way more important than removing a dent from the door or fixing a crunched-up bumper.
After that thought, I noticed damaged cars everywhere. I counted 23 in the parking lot at Target last week, and it was not a busy shopping day. True, some may have been very recently damaged and awaiting repair, but I saw a couple of major dents that had been very poorly spray-painted and a bumper that had been freshly covered with stickers. Clearly, these were not people who took the insurance money for the car repair. They probably kept the cash.
Is it legal to keep the cash, and are there consequences?
This gets us into some muddy waters. I did some digging on several auto repair sites, forums, insurance blogs, and so on. It seems that many people do, in fact, opt to cash the check and leave their vehicle in a state of disrepair. But this does have some ramifications.
First, if you don't own the car outright (and that's a large majority of us), then the bank is the lienholder, and the money for the repair is to keep the car in good condition until the loan has been paid off. They want the car to be repaired, and they have every right to see that you make good on the repair. What's more, if the check is made out to both you and the lienholder, and you cash it, you could be liable for fraud charges and even jail time!
If you own the car outright, it's much easier to decide to take the cash and spend it on bills, a new TV, or anything else. I have read several stories on Auto Repair Service Guide of people who did just that:
Thorax (a username, I believe) said, "Yes you can do that.. I got about 800 for a scratch on my bumper, you couldn’t really even see it unless you knew it was there or got up close… I decided to say screw it and keep the money…"
And Young Ian also chimed in, saying, "Yep, you can cash it. My mom did the same thing some guy hit our salvage title prizm and she got like a thousand dollars for it. It was mainly cosmetic, she used it to pay bills. We still have a pretty ugly side, but she got a thousand bucks!"
Now, over to you...
If you get in an accident and your car receives cosmetic damage, do you get it repaired, or do you take the money and run? In these tough economic times, I can certainly see why many people would go for the latter option.
References:
- Do I Have to Spend My Insurance Check on Getting the Car Fixed?
- Repair the Car or Keep the Cash?
- Do I Have to Repair the Car or Can I Keep the Insurance Cash/Check?
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I've only had one incident where I actually reported it to my insurance company and had the repairs done. Cars are transportation; why on earth would you file a claim for a dent?? I wouldn't want to risk my rates going up for something cosmetic.
Rates only go up when you are found at fault/liable for the accident.
You are working under the assumption that there is insurance. It may very well be that people are dropping collision coverage on their vehicle, making the deductible very high, or, sadly, dropping insurance altogether. So, when the accident happens, they don't have the insurance, and may not have the money in their pocket, to get the repair made or pay a huge deductible.
Well, I know my 2002 Tacoma is sporting a nasty dent on the right front bumper and grille, due to a misguided driver who sailed right through a red light as I turned left with a green arrow. Since no other witnesses came forward, and the intersection in question didn't have a camera, it came down to my word versus hers, at which point the responding police officer declined to issue a ticket. With no ticket, mutual fault was assumed by the insurance companies of the two principals, and her claim on my policy was denied, as was mine on hers. If I wanted to get my car repaired with insurance, I would need to make a claim against my own comprehensive coverage - thereby raising my own rate for years to come for an accident I didn't cause, for damage that's only cosmetic.
So - no. I didn't take the money and run. I didn't get any money, and my truck still bears the sad scars of my run-in with a dishonest driver.
The insurance company actually "totaled" my already salvage-title Sunfire a couple of years ago from hail damage. So there's some nice dents to show for it, but nothing drastic. And now it's double salvage-titled. The money, meanwhile, managed to help me afford an engagement and wedding ring for my now wife and our honeymoon! =)
I had this happen. I was rear-ended and my bumper had some fairly minor damage (I mean, it wasn't falling off or anything). The insurance company wrote me a check for something like $1000 and I never had it fixed. I didn't "need" the money, but I figured I'd rather have it go towards retirement than fix some cosmetics on a car. The car was 100% mine, and I had no intentions of selling it. Then someone ended up totaling my car just a few months later anyway, so a shiny new $1000 bumper wouldn't have lasted me long.
Did the insurance company then view your car as worthless or did you get something for the second accident?
Don't be afraid of looking silly when you take your car into a shop.
Ask plenty of questions. Make sure you know what is going on.
You deserve to understand what is happening with your car, and a good technician will not mind your questions.
The knowledge may come in handy in the future.
My car has a mysterious fender dent from a(n assumed) hit-and-run in the parking lot, although it isn’t that bad. I haven’t bothered having it fixed yet, because the quote was less than my deductible and I’d rather have the cash on hand.
With his last car, my S.O. was hit right in the confluence of bumper-headlight-fender-hood. You could barely see any damage (the headlight was loose, but not broken) but the quote to fix it was close to $2k—about 70% of the value of the car itself. He cashed the check from the other person’s insurance and used it when he bought his new car a few months later when a mechanical repair bill was going to hit about $1k. The damage from the accident didn’t even affect his trade-in value.
I can see how it could cause issues though, if you are in a second incident that does further damage—if you’ve already been paid for damage to that area and didn’t have it fixed, have fun fighting.
We had a pretty bad hailstorm a few months back. My car rec'd about 20 pings or so from it. I do still owe on the car. My insurance estimated the damage at $1400. However, my deductible is $1000. Seeing as I couldn't really get the pings fixed for just $400 and didnt have the cash to shell out the deductible amount (I know...unprepared), I took the $400 and got new brakes and new belts...which had been weighing on me for a few months anyway. So I justified it by at least spending on the car for necessary repairs. I must say, I hate seeing those pings...so I just try to ignore them. :)
This is a finance blog right? So here's the only real way to buy cars. Either you buy a new card and keep it for 15-20 years (150K+ miles at least). Or you always make very good deals on buying used cars and drive them until it's no longer financially worth it (repairs > another used car). In either case it's ludicrous to repair any cosmetic damage.
From a finance perspective it's just lost money - you are literally throwing it out. Technically if you keep a nice new car, new looking and even put 150K miles on it you will be able to sell it for more than if it's all dinged up...but at that point the difference is going to be small.
I drive a nicer car, an audi, it's all sorts of banged up (mostly from living in NYC for 8 years with it). Most of the damage wasn't something I could collect on (piece of wood on the highway, etc things like that). Even still I'd gladly take the money and not repair. I bought it new, it's got 130K on it now, hope to get it over 200K.
Another plus, again if you are planning on keeping the car long term, something banged up is less likely to be stolen!
Another plus (although this one is at least ethically if not legally grey). If you ever do happen to get into an accident...and it's not your fault...you'll end up getting a lot of incidental damage that wasn't related to the accident repaired:)
I would go so far as to say that repairing your car for minor cosmetic damage is something only for rich people to do, people that can afford to throw money away.
I love my car because of the way it drives, none of the minor cosmetic damage affects the way it drives. People should remember what cars are - a way to get from place to place - not a shiny bauble to show off.
I would choose to repair the car if it was under $2,000 to actually fix the problem
Interesting idea. I recently discovered a long, thin crack in my windshield, and it's tempting to cash in (apparently my insurance partially covers replacement), but I'm thinking that if it is a safety hazard, I'd rather just fix the car. Now for those with scratches and whatnot, that would be a different story (as long as it's a cosmetic, not a safety issue, I'd use the money for something else).
My husband was rear-ended the first week of college. His front bumper was completely damaged. When he got the money, he built is own bumper (it is awesome!) and used the rest of the money for college tuition.
Someone hit our car at church and has now filed a claim on his insurance. We turned in an estimate, at his request, but now we would just like to have the money instead. (His trailer hitch hit the front bumper, which we can easily conceal with a front license plate tray.) We've had to do more legwork than I would've thought necessary since it was his fault (and he also left without telling us about it). We had to call his insurance company and then call the adjuster across state. She told my husband that she would release the check to the body shop after the repairs are complete. After telling the body shop that we would just like to have the money, they've suggested that we tell the adjuster we want to "cash it out." Will the insurance company give us the money? It's less than $900. (We do owe a little against it, but do we have to tell them that?)
It all depends on the kind of damage caused, if they are a little too much we can file a case or else can get it repaired if there is nothing serious.
After spending almost a fortune repairing my old Mercedes Benz, I'd suggest people to spend the cash, at the long term it will be cheaper.
Our '06 kia suv got SLAMMED by a large piece of ice (near allentown pa turnpike) by someone driving a a large box van who didnt dlean off the top. My wife was nearly killed and the ice smashed hoid, roof and went thru windshield. Guy took off not caring what he'd done (& he WAS aware).
Estimate $4,000, value of car $7-8,000. I wanted fixed anyway cos we r the only owner. But my wife wanted totaled (& many ppl put that idea in her head). If totaled, I looked at it like we'd most likely be spending another $15k + the totaled check to replace.
BUT the point of diminished value is a good point.
Funny, cameras on the highway didn't fond the culprit. Prob. Only if my wife was killed would they really look!
I've never decided to skip the repairs entirely...but I have decided to keep driving a car that was totaled by the insurance company. They gave us the cash value of the car (minus our deductible) because that was less than the cost of bringing it back to pristine condition--but fixing it just enough to make it driveable was much cheaper. (The estimate from the repair shop said, "Owner understands that it will not be pretty.") So we did that, kept the extra $900, dropped our collision coverage, and kept driving it for two more years. Unethical? How? It didn't cost the insurers any more, and it kept our old car on the road instead of in the landfill.
Wow. Still fraud in my mind. You're causing the other persons insurance to go up so you can buy a new tv? Get a life! Use the money for what it is intended for. And if you don't? I hope someone without insurance hits you, because you honestly deserve it.
Perhaps bad and discourteous drivers should stop being so, and they won't be punished by their insurance companies. What you are describing is NOT, in fact, fraud and it's well recognized that the individual who has been WRONGED (because someone is an idiot, frankly) has the right to do whatever they want with the money they are RIGHTFULLY owed.
How is it fraud? The other person caused monetary damage to your net worth, and you were compensated for it. It doesn't matter if you reinvest it in the same car or in the stock market or some other way. All the insurance money does is make you whole monetarily speaking.
This is how I see it. If my car is worth $3000 and the damages are $1000 then I can either fix the car and keep it's value at $3000 or take the $1000 and spend it on something else knowing that my car is really only going to be worth about $2000 now. Either way, it's still my money. I'm just using it in a different way. But, I feel like this works for me because my car is almost 10 years old, is paid off and has 260,000 miles on it.
This is life. Why dont you get a clue . Nobody cause anybodys insurance to go up except for the one who is unfortunatly at fault. i know, ive been on both ends of the spectrum. the one whos at faults insurance goes up regaurdless... unless youre suggesting if someone smashes into you to just say "No biggy, just 3-4,000$ worth of damage , itll be fine, you have a nice day, bye" Because thats the only way there insurance wont go up but yours sure will. And i can tell from all the malice you display you most definatly would not be taking that course of action. you seem like one of those road rage types.
Thank you for sharing this information. I recently got in a car accident and my radiator busted. I need to find a good body shop to fix the problems with my car. As you said, some people can live with a dent or two, but I need my radiator fixed so I have to spend the cash for my car to even work! Body shops are very helpful when we are in need of repairs and replacements for our vehicle. It is important to find a good body shop that is reliable and recognized so we are able to get what we paid for. Thanks again!
-Chris
I received two checks when I hit a deer. One for the mechanical repairs and the other for the cosmetic repairs. I repaired the mechanical damage of course, but the cosmetic damage was nothing more than a scratch and a couple very small dents. I own the car outright, so I decided to keep the money from the near $1,000 estimate and use that to invest in myself so that I can eventually make that money back along with profit that I will then maybe use to fix my car.
Excellent post.
This is a poorly written article, by someone who does not relate to the masses. It takes narrow approach to the topic by assuming that all damages are worthy of filing for insurance claims and it also leaves out the possibility of self-inflicted damages, vandalism or just wear and tear damages that are not worth the trouble of reporting or filing a claim because to do so would risk insurance rates going up and/or deductible would often be much more than the damages. Article does not address non-insurance and non-accident cosmetic damages and dents.
I do not have a comment but a question. I have a car and only a couple more months to pay. It was stolen but eventually found. there was damage to the car and i have an insurance claim which i have received, do i have to spend all the money on repairs?
Somebody just hit my car as it was parked outside my house. The car is almost 20 years old and I was planning on replacing it soon anyway. Can I just take the money and put it toward a down payment on a new car? I own my car fully, and it's probably only worth like 800 bucks anyway - even without the damage.
I don't have a comment,but a question.I just got a used car from my friend,So far it was good but know it is been out of order.I want to repair my best used car.But don't know where to go and find a well experienced mechanic?
Well I am in this situation right now. My hood flew up while I was driving, turns out the latch had frozen shut, anyway I went to the autobody place first because I know those guys very well. And they gave me one estimate if I was gonna pay it myself and one if I got insurance involved. I was planning to pay it myself until I saw the estimates! Turns out it was covered under comprehensive and my rates aren't even going to go up. But my question is the obvious one: the check was made out to me. The insurance adjuster made a point of telling me to take the check straight to the autobody guys plus 100 bucks out of my own pocket but they are good friends as it turns out. But if they already said they can do the job for 1200 and a make money, do I still have to give them the check for 1900 ? PLUS the 100 deductible? Because the other thing is I have an expensive to the tune of 500 bucks repair I have to make to pass echeck and I would like to fit all of this into the 1900 bucks.
How does this affect your insurance policy? Assuming you don't get the damage repaired, should your premium be lower?