Can I / should I accept reimbursement for a car repair I didn't do?

June 30, 2009 7:40 AM

Is it legal to accept $500 from a car insurance company, reimbursing me for a repair I'm not going to make? If it's legal, should I?

Recently my car was very lightly rear-ended. Both I and the other driver are insured. There were no injuries and my car has no visible damage -- I took it to my mechanic, who I trust, who confirmed that there was no damage from the collision. The other driver's insurance company sent a photographer to take photos of my car to check its condition. The photographer reported a small nick in my bumper, and based on this, the other driver's insurance sent me a check for $500 for a new bumper. The nick is almost invisible (my wife can see it, I haven't managed to) and we have no interest in getting a new bumper. My wife thinks it might be OK to just cash the check, on the grounds that the eventual resale value of the car will be lower because it's been involved in an accident, however small. I'm concerned that it might actually be against the law to cash a check for replacing a bumper that I didn't actually replace. I see a few options:
A. Cash the check, pocket the money.
B. Cash the check, replace the undamaged bumper. (Seems like a waste of the world's resources, but maybe I should think of it as economic stimulus?)
C. Don't cash the check, keep it, and if I need to replace the bumper for some other reason in the next year (the life of the check,) cash it.
D. Cut up the check.

We don't want to do anything illegal. So: which of these four options is legal? And of the legal ones, which are ethically OK?
(Anonymous in case the right answer is "A is probably legal but I wouldn't do it if my real name were attached to the general practice in a public place.")

posted by anonymous to work & money (18 comments total)

Any of them are legal. They cut you a check for a repair that would take $500; it's your choice whether or not to cash it.

Look at it this way: Imagine your car was totaled, and they wrote you a much bigger check for the full value of the car. You realize, during your week without a second car, that you don't really need one, and it's much cheaper to get by with just one car and some heavier bus/taxi use. Would you return the check? Of course not. Same principle here.
posted by Tomorrowful at 7:43 AM on June 30

I'd wager that MOST cars you see out there with visible damage, which haven't been repaired, are instances where owners pocketed the money rather than opting to fix their vehicle.

If it were illegal, half the driving population would be behind bars.

Your car was hit. You've been inconvenienced. Take the check and cash it.
posted by wfrgms at 7:45 AM on June 30

Remember, they are not only reimbursing you to fix your car, but they are also paying you for loss of value on your car. Accidents lower the resale value of the car in the future. You are free to keep this money and use it for any purpose you like.
posted by ShootTheMoon at 7:45 AM on June 30

It's completely legal to cash the check: they are reimbursing you for the other driver's wrong. Whether or not you make the repair is up to you. Your wife does make a good point about the future resale-- although accidents with damage under $2000 don't have to be reported when reselling--a used car will always be docked for nicks, scratches, and wear and tear. Cash the check in good conscience!
posted by Eicats at 7:47 AM on June 30

Remember, they are not only reimbursing you to fix your car, but they are also paying you for loss of value on your car.

Not in my experience. They pay you exactly what it costs to fix your car. You can fight for a payment for "diminished value", but good luck.
posted by smackfu at 7:53 AM on June 30 [1 favorite has favorites]

You can fight for a payment for "diminished value", but good luck.

Yeah, just follow up, and slightly off topic, but this guy's insurance company is either run by saints or fools. They just coughed up $500 to a guy (you) who wasn't hopping mad? That's amazing.
posted by wfrgms at 7:57 AM on June 30

Typically the insurance company will either write the check to the auto body shop or write you a check and have you sign a form indicating that if you don't do the work the car will be devalued by that amount should you have further claims.
posted by Gungho at 8:03 AM on June 30

Do you own the car outright or is it still being paid for? If you do not own it out right, you probably have an obligation to the lien holder (whomever you are financing through) to repair the car.
posted by jerseygirl at 8:08 AM on June 30

Yeah, just follow up, and slightly off topic, but this guy's insurance company is either run by saints or fools. They just coughed up $500 to a guy (you) who wasn't hopping mad? That's amazing.

True, but the operative word here was "rear-ended." $500 is a low price to pay to get out of potential back or neck injury claims that could crop up down the road.
posted by MegoSteve at 8:14 AM on June 30

The way I understand things, the insurance company actually wants you to cash the check.
This is an implicit consent that you have been compensated for the extent of the accident. After cashing the check, you can no longer come back in 3 months claiming that the accident caused substantial damage to your car and asking for $5000.

The check is made out to you - you decide how/where to repair your car. If they wanted to ensure it covered only the bumper, it would have been made out to the repair facility. There isn't much flexibility in the estimates a claims adjuster writes, the value they quote is a reasonable cost of repair - they do this specifically so they don't need to spend the effort tracking down the cost of every repair. If you went back to them and asked for $501 (or any other larger amount), I suspect the amount of documentation / proof you would need (as well as your legal liability) would increase dramatically...
posted by NoDef at 8:16 AM on June 30

Keep in mind that this is an insurance claim for the damage. It would be fraud if the damage had not occurred. But, it did, and you made the claim. Your insurance company held up its end of the bargain. As far as they're concerned, one you cash the check, the claim is closed.

My opinion is, just take the money.

If you're really weirded out about this, take a minute and take to an insurance lawyer.
posted by Citrus at 8:20 AM on June 30

You don't need to hear it one more time, but my ego demands that I say it: cash the check. Totally legal, moral, and non-fattening. Unless you get $500 worth of ice cream and eat it all.
posted by The Deej at 8:23 AM on June 30

IAAL ... cahs the cheque and have a party on the insurance company
posted by jannw at 8:24 AM on June 30

The only reason that I'm adding to the correct answers already given is because I used to work in the insurance industry, and I cut checks to claimants for damage done to vehicles. You are not obligated to get the vehicle fixed. If there is any damage to the vehicle at all (however minor), it's morally appropriate to be reimbursed for what would be required to indemnify you in this case; namely, a new bumper. And as mentioned above, the insurance company actually has an interest in having you cash that check, because open claims, where someone could come back and make a claim at a later time, are anathema to insurance companies. By cashing that check, you agree that the claim is settled. This is worth money to them.

The fact that you might not have it fixed is already worked into the check. If you took it to a body shop and asked to have it repaired, the insurance company would actually reimburse the auto shop directly for the exact amount, which would include labor costs as well. It's possible that the insurance company did something like this: $250 for a new bumper, plus throw in some extra for your inconvenience, which will assuage hurt feelings and cover labor costs if you decide to get it fixed; and on their end, the claim is closed to auto-material damage and injury claims and they don't have to deal directly with an auto-body shop.
posted by SpacemanStix at 8:54 AM on June 30 [1 favorite has favorites]

If you're still not convinced and plan to hang on to the check against unanimous advice, be sure to verify that the check doesn't have "void after X days" on it or check with the issuing bank to fnd out their policy on cashing old checks.

But, really, cash it.
posted by ellenaim at 10:51 AM on June 30

Cash it. The check is to make you whole for the damage to your car. They have decided that $500 is what that will take. The check is yours to do with as you see fit.
You have been injured, you have been compensated, the end. Don't spend it all in one place.
posted by willpie at 12:58 PM on June 30

Just as a cautionary note - be careful before you close the claim.

I had an incident like this recently. A Jeep ran across the road and bit my car. The owner's insurance company cut me a check for $800 for the bumper and body work. I was tempted to just keep, but I eventually dropped it off at a repair shop. Once the bumper was removed, they found that the bumper mount itself had been bent and needed to be replaced.

All told, the repair was about $1700 (the difference of which the insurance company paid directly to the shop). Had I just kept the money I'd be driving a car with a slight bump and some hidden structural damage. I would also have no recourse but to fix that damage out of pocket.

That's the problem here. Everyone is assuming that the only damage is to the bumper paint. And that may very well be true, but you should go into this knowing that you're making a gamble against yourself by cashing the check and closing the claim.
posted by krisak at 1:21 PM on June 30 [1 favorite has favorites]

It's legal. Cash the cheque, put it in a savings account against your deductible should you get dinged again and it's your fault.
posted by arcticseal at 6:25 PM on June 30