Can I keep insurance money from a car accident?

Yes, you can keep car insurance money from a car accident, rather than using the money for repairs, if you own your car outright and the insurance company did not pay the mechanic directly. Depending on the details of your insurance policy, you may not be required to use your claim settlement check to repair your car. But you should keep in mind that if you don’t repair the damage and it results in subsequent problems, your insurance provider may consider you to be negligent and deny you coverage.

Even if you own your car outright and your insurance company sends you a direct payment, you still need to check your policy before you decide to keep the money. In some cases, your insurer may not allow you to keep your collision or comprehensive coverage if you don’t get your car repaired. Violating the terms of your policy to keep the payment could also constitute insurance fraud, so you should always check before you decide to spend the money elsewhere.

In other words, not every driver is eligible to keep the money from a car accident insurance settlement, and in some cases, doing so could cause problems with your insurer and your lender or lessor.  

When You Can’t Keep the Money From a Car Accident

• If you take your car to an insurer-approved body shop, your insurance company will likely send the payment directly to the mechanic.

• If your car is leased or financed, your agreement likely requires you to keep the car in working order, so you are obligated to fix it.

• If the check includes both your name and your lender’s or lessor’s name, you will need their approval before you cash it.

• If your policy prohibits it, you can’t keep the money from a car accident.

Keeping a Car Accident Check From the Other Driver’s Insurer

If the accident was caused by another driver, you will usually receive a direct payment from their insurance company. Because you are not that insurer’s customer, they will not require you to spend the money a certain way. However, your lender’s or lessor’s rules will apply to all insurance claims, regardless of which insurer is involved.

Keep in mind that if you choose not to use the settlement money for repairs, you’re risking additional consequences in the future. If the damage to your car causes other issues down the line, they won’t be covered by the at-fault driver’s insurer or your own policy.