Can You Keep the Money from a Car Insurance Claim and Not Repair Your Car?
Navigating a car insurance claim in New York City can feel overwhelming, especially after an accident on congested streets, busy avenues, or major roadways like the FDR Drive, BQE, or Cross Bronx Expressway.
NYC drivers also have to contend with dense traffic, strict parking rules, vehicle inspections, and insurers that frequently work with preferred local repair shops. All of these Big Apple realities can affect what happens after you receive an insurance payout, and whether keeping the money instead of repairing your car is truly a smart option.
In many cases, you may keep the money from a car insurance claim in New York State and choose not to repair it. However, there are exceptions, alongside other reasons why the short-term cash infusion may not be worth it.
Complicating factors include whether or not you own the vehicle outright, if the insurance company deals directly with auto repair shops, where you live, and the extent of the damage.
Please note: Douglas & London only accepts cases in New York, New Jersey, and Connecticut. We cannot accept cases outside of those areas.
Do You Need the Money More Than the Repair?
There are several reasons why a person might keep the claim money rather than spend it on the repair. You may not want to go through the hassle of car repairs, especially if it means being without a vehicle for an extended period. Or if you have an older car, you might not mind driving around with a few dents and scratches– especially if you have a hefty check in your hand– that could be used on other necessities. The auto insurer has fulfilled their obligation by making payment on a valid claim, so as long as your policy and state allow it, you can keep the money to use as you choose.
What if the Check Is for More Than What the Repairs Cost?
After a crash, the insurance company may write you a check for more money than the actual cost to repair your vehicle. This can be surprising, but it’s more common than you might think, especially if the initial repair estimate was high or costs changed during the process.
Before making any decisions about what to do with the money, it’s important to confirm exactly what that check represents and what it’s supposed to be used for. For example, in addition to your physical damage settlement, insurers may include money for:
- Rental reimbursement
- Out-of-pocket expenses
- Diminished value claims
Reviewing what the sum is supposed to cover with your attorney helps ensure you understand whether there is, in fact, an overpayment.
What if You Keep the Extra Money?
While it might be tempting to pocket the difference, you open yourself up to big risks if you keep money you weren’t actually entitled to receive. For example, if the insurer determines you were overpaid and failed to disclose this, they may:
- Demand repayment
- Adjust future claims
- Raise your premiums
- Allege misrepresentation or insurance fraud
In some cases, notifying the insurer immediately about a surplus and getting clear written guidance on how it may be handled can protect you from legal or financial complications.
If you’re unsure why the amount you received exceeds your repair costs, or how to proceed without jeopardizing your rights or coverage, know that the experienced legal team at Douglas & London can provide clarity and help protect your best interests.
Who Owns the Car?
If you are making payments on a loan or a lease agreement, you technically do not own your vehicle. Therefore, you are not able to decide whether or not to fix it. Most of the time, you are not only obligated to repair your vehicle but to use the auto insurer’s preferred mechanic as well. Your lender will want you to promptly take care of the repairs to their asset. If you own the vehicle outright, you have greater flexibility in repair decisions.
Who Is the Payment Made to?
When you have a loan or lease, the check might be made out to both you and the lender or leasing company. In this case, you’ll endorse the check and send it to the lien or lease company; they’ll ask for documentation (such as photographs and a copy of the repair bill) that the repairs were made before signing the check over to you. If you cash the check by forging the lien holder’s signature, then you could be held liable for fraud.
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If the check was made out to you and you still have a loan or lease, your finance agreement may require you to at least notify the loan or leaseholder about the damage. Sometimes insurers require that you go through one of their preferred repair shops and the money is made out directly to the vendor– in which case, you have no opportunity to keep the money. However, one benefit of working with a referral repair shop is that they stand behind their work and take care of you– even if it turns out there is additional work necessary.
What if You Filed a Personal Injury Lawsuit?
Personal injury lawsuits work a bit differently. If your injuries are substantial and the other driver is clearly at-fault for the accident, you may step outside New York’s “no-fault” system to sue the driver for damages. When you receive the check, the other party does not know whether your car is financed or not. As a result, the check will be made out solely to you– but you may still need to notify your financier if it’s written in your agreement. Some policies mandate that you keep the vehicle in “perfect working condition,” which means you must repair.
Where Do You Live?
States like Massachusetts require insurers to make checks payable to both the claimant and the lienholder. States like Ohio mandate that specific repair shops complete the work at no additional cost to the policyholder. In New York, checks may be made out directly to claimants.
How Extensive Is the Damage?
Spending this claim money as you please is a gamble. Once you’ve claimed certain damages, you cannot claim it again– even if the damage worsens or you get into a future accident and it’s discovered you never repaired the first claim. You could be on the hook for paying all damages.
If you want to continue with comprehensive or collision coverage, you may need to complete the repairs as recommended. Many insurance providers drop physical coverage from vehicles that have not been repaired, with photos and receipts submitted, as per policy requirements. It is important to check with your insurer to determine what is expected of you. If you need the cash, you may be able to make your claim and have the repairs done at a later date, simply letting your insurance agent know when the repairs are done so that you can restore your physical coverage.
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Substantial damage proves other challenges. You may face the choice to declare the vehicle a “total loss” or choose to repair it. A loan or leaseholder will be paid first and you second either way. If the airbags have gone off or the frame has been damaged, it is usually best to replace, rather than repair, as many insurers refuse to offer coverage on these vehicles. If you agree to repair the vehicle, but ultimately keep the check, you will be on the hook for covering future damage. Driving a damaged car diminishes its value, so you’ll receive less money for a totaled vehicle in a future insurance payout.
Do You Need to Report the Claim at All?
In New York City, deciding whether to report a car accident involves more than just weighing repair costs. Under New York law, you are required to file a police report and submit a DMV Form MV-104 within 10 days if an accident causes injury, death, or property damage exceeding $1,000, which is a threshold that is quickly met in many NYC collisions.
Accidents on busy city streets or highways like the West Side Highway or Cross Bronx Expressway often trigger mandatory reporting, even when the damage may initially appear minor. Failing to report when required can lead to fines, license suspension, or complications with future insurance claims.
If the damage is truly minimal and does not meet reporting requirements, you may choose not to file an insurance claim to avoid a potential premium increase, particularly if you can afford the repairs or handle them yourself.
However, if another driver was involved and reports the accident, or if the NYPD created an accident report at the scene, it’s usually in your best interest to file a claim and have your vehicle professionally repaired. Keeping your car in safe, road-ready condition is especially important in NYC, where inspections, parking enforcement, and daily stop-and-go traffic can quickly expose unresolved damage.
If you’re unsure whether your accident needs to be reported, or how filing—or not filing—a claim could affect you, speak with an experienced New York City car accident lawyer. Our firm offers free consultations and can review your insurance policy, accident circumstances, and reporting obligations to help you make the most informed decision possible.
