Is it dishonest to use insurance payout for something else?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Okay thanks. I told my mother about this and she thought it was totally dishonest. "If you don't want to fix the car, then what are they paying you for?". I kinda reasoned that the money was due me regardless because the person hit my car. My mother reasoned that because this isn't an emergency (as in, I need to pay $1200 in order to not be evicted), spending the money on anything else is fraud.

You pay your premiums for a reason. Not dishonest. We've spent money earmarked for one thing on other things often. We've gotten credits for real estate transactions on inspection items we didn't actually care about then never did the work. According to your mother that would be dishonest too.

Yes, people do pay their premiums for a reason and it’s not so that they can pay off other drivers’ unrelated debt. The driver who hit OP’s car will see a premium increase as a result of OP’s claim. He paid those premiums to mitigate damage or loss that he caused, not to pay off OP’s credit card debt or student loans.

OP, let your own actions serve as a lesson to you to drive carefully. There are a lot of other people out there who would be happy to file a claim against you in a hot second if they thought they’d get a windfall.

[Anonymous]

You're totally in the clear, and it is not fraud.

[Anonymous]

The money ends the conflict and makes you whole. You can decide what to do with it.

[Anonymous]

We just did this for the same exact scenario. $1650 payout. It was just a scratch on our car, which already has some body damage and countless other scratches - it’s a 2007 with 130k miles and fully paid. Geico explicitly said this was an option and we even told them how we were going to just take the check rather than get the fixes done since we bought a new house that requires some reno and would prefer to put the money there. The Geico guy commented that that made sense noting how minor the scratch was anyway...

[Anonymous]

Anonymous wrote:Okay thanks. I told my mother about this and she thought it was totally dishonest. "If you don't want to fix the car, then what are they paying you for?". I kinda reasoned that the money was due me regardless because the person hit my car. My mother reasoned that because this isn't an emergency (as in, I need to pay $1200 in order to not be evicted), spending the money on anything else is fraud.

Your mother is ignorant.

[Anonymous]

It is your money. The insurance co. who is paying you does not care if you get the car fixed or not.

[Anonymous]

What about taxes? If OP pockets the insurance payout, do they need to claim on income taxes?

[Anonymous]

You're being compensated for the damage--you have no obligation to fix it.

[Anonymous]

I once got $2700 for the same scenario. The car was worth less and hardly dented. Yes, the $$ went elsewhere. It's just what makes sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Okay thanks. I told my mother about this and she thought it was totally dishonest. "If you don't want to fix the car, then what are they paying you for?". I kinda reasoned that the money was due me regardless because the person hit my car. My mother reasoned that because this isn't an emergency (as in, I need to pay $1200 in order to not be evicted), spending the money on anything else is fraud.

You pay your premiums for a reason. Not dishonest. We've spent money earmarked for one thing on other things often. We've gotten credits for real estate transactions on inspection items we didn't actually care about then never did the work. According to your mother that would be dishonest too.

Yes, people do pay their premiums for a reason and it’s not so that they can pay off other drivers’ unrelated debt. The driver who hit OP’s car will see a premium increase as a result of OP’s claim. He paid those premiums to mitigate damage or loss that he caused, not to pay off OP’s credit card debt or student loans.

OP, let your own actions serve as a lesson to you to drive carefully. There are a lot of other people out there who would be happy to file a claim against you in a hot second if they thought they’d get a windfall.

OP's car will still have unrepaired damage, so the value of the car decreases. The damage is the lower of the total car value and the repair cost. Imagine that your car is totalled and you got $2,000 for it. Are you going to buy another $2,000 car with it? Assume that you can't afford a $2,001+ car.

[Anonymous]

Anonymous wrote:The car is a 1998, long paid off. Has over 200K miles on it. $1200 for repairs is not really worth it to me. I would prefer to use that to pay my credit card and other bills.

Had a similar situation, although in my case they totaled the car out, and it was only worth about $1500. I was planning to repair the car, but by the time the money arrived, I'd discovered I could drive it without the bumper falling out.

I kept the money, drove the car until it died, and pocketed the money.

Ahhhhh, life in graduate school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Okay thanks. I told my mother about this and she thought it was totally dishonest. "If you don't want to fix the car, then what are they paying you for?". I kinda reasoned that the money was due me regardless because the person hit my car. My mother reasoned that because this isn't an emergency (as in, I need to pay $1200 in order to not be evicted), spending the money on anything else is fraud.

You pay your premiums for a reason. Not dishonest. We've spent money earmarked for one thing on other things often. We've gotten credits for real estate transactions on inspection items we didn't actually care about then never did the work. According to your mother that would be dishonest too.

Yes, people do pay their premiums for a reason and it’s not so that they can pay off other drivers’ unrelated debt. The driver who hit OP’s car will see a premium increase as a result of OP’s claim. He paid those premiums to mitigate damage or loss that he caused, not to pay off OP’s credit card debt or student loans.

OP, let your own actions serve as a lesson to you to drive carefully. There are a lot of other people out there who would be happy to file a claim against you in a hot second if they thought they’d get a windfall.

OP's car will still have unrepaired damage, so the value of the car decreases. The damage is the lower of the total car value and the repair cost. Imagine that your car is totalled and you got $2,000 for it. Are you going to buy another $2,000 car with it? Assume that you can't afford a $2,001+ car.

This x 100.

I drove this awesome beater right out of college, and some asshole rear ended me. The car was worth nearly nothing, but it was a great dependable, well maintained car. I got $3K for it, and it really pissed me off. I was not able to get a similarly well running car for $3K.

[Anonymous]

Why do people ask dumb questions like this?!

The Insurance company insured an event. The event happened and the company paid out per the terms of the agreement. It's upto the owner to do what he pleases with the proceeds. Why is that difficult to understand?

[Anonymous]

Anonymous wrote:Why do people ask dumb questions like this?!

The Insurance company insured an event. The event happened and the company paid out per the terms of the agreement. It's upto the owner to do what he pleases with the proceeds. Why is that difficult to understand?

It's not dumb because as was pointed out, the answer is different if the car is paid off vs if it is financed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why do people ask dumb questions like this?!

The Insurance company insured an event. The event happened and the company paid out per the terms of the agreement. It's upto the owner to do what he pleases with the proceeds. Why is that difficult to understand?

It's not dumb because as was pointed out, the answer is different if the car is paid off vs if it is financed.

There is no clause in a typical finance agreement that forces the repair. I never repaired any cosmetic damage on mine, only made it drivable.