Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • When the insurance company pays out for a claim for damage to your vehicle, they may either pay it directly to you or to the car repair shop
  • Even though you may be tempted to take the money from your claim for something other than the repairs, this is a risky choice
  • If you do not have your car repaired using the insurance money, the value of your car will be severely diminished

After you receive money from the insurance company for damage to your car, you may consider whether it is necessary to take the money to have the car repaired.

If you choose to pocket the money, you are taking a risk in the event of a future accident and may not be able to sell your car for a reasonable price.

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Receiving Money from a Car Insurance Claim

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Whether or not you think you are at fault for a car accident, you should contact your insurance company to alert them of the accident as soon as possible.

Depending on the terms of your policy and the laws of your state, the insurance company will either pay you directly or directly pay the bill of the repair shop.

If you receive a payment from your insurance company, it will likely be filed under your collision or comprehensive coverage.

When thinking about your insurance needs, you will want to keep in mind that collision coverage will help cover the cost of repairs to your car if you are at fault for an auto accident.

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Deciding When to File a Claim

After an accident, you will want to assess the damage to your vehicle and compare it to the deductible under your auto

If the total damage cost is not much more than the deductible you would have to pay, then it might make sense for you to pay for the repair out of pocket rather than filing a claim.

In thinking about what coverage is right for you, the role of your deductible is important.

If you have the personal assets to cover a higher deductible, then you may be able to pay a lower premium for your auto insurance policy.

In addition, if you have a high number of claims or a large payout from your policy, this may affect your insurance company’s decision of whether to renew your policy or not for the next term.

Arranging for Repairs to Your Car After an Accident

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It is important to cooperate with your insurance company in all aspects of investigating the damage to your car after an auto accident.

An insurance claims adjuster will assess the damage to your vehicle and provide an estimate with the expected repair costs.

You are entitled to ask for a copy of the adjuster’s report in writing and should retain a copy for your records.

– Disagreements

You may have a disagreement with the adjuster over the estimate of the damage. It is best to address this as quickly as possible.

You may disagree with your insurance agent about the settlement of your claim and the total estimate amount.

For information specific to your state on how to pursue your claim through your state insurance department, consult this list of insurance departments by state.

– Choosing Auto Shop

It is within your rights to choose the auto repair shop that you would like to fix your car after an accident.

You should keep in mind that the estimate for your car’s repair will not be based on the rates of any single repair shop, even if you provide that specific estimate to the insurance claims adjuster.

Instead, the insurance claims adjuster bases the repair estimate on the average cost of parts and labor to fix the damage to your car in the general area.

Before you have any repairs done to your car, it is a good idea to alert the claims adjuster or your insurance agent of the specific body shop that you will be taking your car to.

The Bottom Line

Laws vary by state on whether the insurance company will pay the body shop directly or the policyholder in the event of a claim.

The most prudent choice in receiving money from the car insurance company after an accident is to use it as it was intended for fixing your vehicle.

If you choose not to have your vehicle repaired, your insurance company will have a record of that, and any payout you could receive in a future accident will be reduced.

You may also experience difficulty in trying to sell your car or trade it in if you do not have the damage from an accident properly repaired.

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