Insurance Money Question - Can anyone help?

Does anyone know... If a person collects auto insurance money, say from an accident, are they legally obligated to spend the money to make the car repairs caused in the accident?

I know I've heard a lot of people collect money from insurance because someone hit them and then they spend the money on something else and don't have the dent fixed or whatever.

I'm just wondering about the legality of this. Does anyone kow?

Thank you!

[edit on 25-3-2007 by Benevolent Heretic]

No, unless the insurance policy explicitly states that (and they probably would not include you in the payment transaction), then you are not obligated to fix your vehicle.

I have had a couple claims in which I bought new appliances and even tools and only marginally repaired the vehicle. I also had a situation where we sold a car on a payment plan and still kept comprehensive insurance on the vehicle even though my ex wife and I weren't the primary drivers any more. The person we sold it to crashed the vehicle and we actually collected from the insurance company..... I don't remember how we achieved that, but no one said anything otherwise. The guy who crashed the car was a little upset by the fact he never bought his own insurance and we had a falling out over it.

But as far as I know, most policies do not stipulate what you do with insurance monies. Every policy is different though and one should inquire with their insurer.

Rule of Thumb: if they cared what you did with the money, they wouldn't give it directly to you. They'd cut a check to the repair shop. Same with homeowner's insurance. Look at it this way- they're compensating you for damage to something you own. You can get it fixed and restore the value of the object, or not. If you don't get it fixed, then the object has lost value. Either way, it's your choice.

Originally posted by yeahright
Rule of Thumb: if they cared what you did with the money, they wouldn't give it directly to you.

That's true!

Thanks a lot guys.

Originally posted by ben91069
I also had a situation where we sold a car on a payment plan and still kept comprehensive insurance on the vehicle even though my ex wife and I weren't the primary drivers any more. The person we sold it to crashed the vehicle and we actually collected from the insurance company..... I don't remember how we achieved that, but no one said anything otherwise. The guy who crashed the car was a little upset by the fact he never bought his own insurance and we had a falling out over it.

I think that was because you were considered "the loss payee"......That's what they call the bank, when you still owe them for the car/house you've financed. ( If you say, burn down your nice new house, you don't get to keep the insurance money.......whatever you owe comes out first.)

We have usually kept the cash, and done the repairs 'in house'. But our cars were already paid for when those incidents happened.......My sister-in-law has a lovely, expensive, leased vehicle, and when she 'lost' her $4000 side mirror, I believe the check was made out directly to the repair shop.

If there is a lien on the vehicle then yes you have to fix the car or pay the money to the lienholder against the loan. If you own the car outright then you can pocket the money. The claims paid are for damage to your property that you have insured. You can spend it anyway you like since it is money recovered from personal property damage.

I have sold auto insurance (high risk specialist) for 15yrs in Missouri.