What If Insurance Check Is More Than The Repairs

Most of the time, when an accident damages someone’s car, the primary concern is whether the insurance settlement will be enough to repair the damage. However, occasionally, insurance companies may issue a check that exceeds the cost of repairs. What should you do if this happens?

Verify What the Check Is For

The insurance company may owe you money for several types of damages. Usually, insurance companies issue separate checks for physical damage and injury claims. Still, before you make any decisions it is a good idea to verify what the check you received includes. For example, if you have rental coverage on your policy or received a settlement from a third-party insurance company, your check may include an amount for loss of use.

Double Check the Cost of Your Repairs

It is common for the final cost of repairs to exceed the initial estimate. Before you decide what to do with any extra money from an insurance settlement, wait until your repairs are complete. You may find that you were not overpaid for the repairs after all.

Consider the Full Cost of Your Claim

The cost to repair your vehicle may not be the only cost related to your claim.

Diminished Value

If someone else was at fault for your accident, you can make a claim with the third-party insurer for diminished value. Diminished value is the amount that the resale value of a car decreases due to the car having been in an accident.

The insurance company may require you to submit documentation that supports your claim, such as repair records, photos and proof of your car’s pre and post-loss value. If the insurance company agrees to a diminished value settlement, it may apply any overpayment on your repairs to that loss.

Out of Pocket Expenses

If you paid for expenses that should be covered by the insurance settlement out of pocket, the settlement check may include an amount for your out-of-pocket costs. For example, you may have paid a tow truck to tow your car to the shop.

Notify the Insurance Company

If after considering the above factors, you believe the insurance company overpaid your claim, contact your claims adjuster to discuss the excess payment. The adjuster will investigate your claim to determine whether you were overpaid in error and whether the insurance company expects you to keep the money or return it.

Potential Consequences of Keeping the Extra Money

If you decide to keep the extra money without notifying the insurance company, there could be consequences.

Higher Premiums or Loss of Insurance

If the settlement check was from your own insurance company and it discovers you knew you received an overpayment and did not say anything, it may increase your premiums or cancel your policy, depending on the terms of your contract. This may also affect your ability to get insurance with another company.


If the insurance company asks you to return the overpayment and you do not, it could file a lawsuit. If the insurance company wins, you may end up having to pay the money back, plus legal fees and possibly interest.

Fraud Accusations

If the insurance company determines that you intentionally concealed an overpayment, it may notify the government which could result in fraud charges. An insurance fraud conviction can lead to penalties of one to 25 years in prison, depending on the severity of the offense. Additionally, the databases insurance companies use when deciding whether to insure a new customer and at what price may flag you as being a fraud risk.

Using the Money for Other Purposes

Now you understand the risks of pocketing an overpayment, but you may be wondering if you have to use your settlement check to fix your car. New York law prevents insurance companies from making settlements of a physical damage claim dependent on getting the car repaired. However, in some situations, there may be restrictions on how you can use your settlement check.

Insurance Company Issued the Check To You and the Shop

Sometimes, the insurance company will issue the check to you and the shop. In this case, you will have to get the shop to sign off on the check before you can cash it. Sometimes, if you decide not to get your car repaired at a shop, the shop may charge you for the estimate it did and storage fees for the time your vehicle was taking up space.

If you owe the shop money, you may need to pay what you owe before the shop will endorse the check. At that point, you can probably do what you want with the rest of the money.

Insurance Company Issued the Check To You and a Lienholder

If you still owe money on your car, your lienholder may require that all insurance settlement checks be jointly issued to you and the lienholder. This is because the vehicle serves as collateral on the loan and if you stop making your payments, the lienholder will not get as much money if it repossesses and sells a wrecked car. Depending on the policies of the lienholder, it may either agree to sign the check and allow you to use it how you see fit or it may require you to endorse the check and send it to the lienholder so that it can use the money to pay the shop directly.

If you received a settlement from a third-party insurance company, that company is not obligated to include your lienholder on the check. However, the terms of your loan or lease may require you to maintain the vehicle in good condition, so you should be cautious about deciding not to repair the vehicle.

Potential Consequences of Not Repairing Your Car

If you do not owe money on your car and the insurance company issued the check to just you, not repairing your car is probably an option. However, there are potential consequences.

Hidden Damage

There could be damage to your vehicle that you cannot see without taking the car apart. If you spend your settlement money on something else and then your car stops running because of hidden damage, you will have to pay for your repairs out of pocket. Additionally, if choosing to drive your car without repairing it made the damage worse, the insurance company does not owe you anything extra.

Insurance Company Could Reduce or Deny Future Claims

The insurance company can request to inspect your vehicle, whether or not you decide to repair it and keep that inspection report in its files. Additionally, New York insurers must request a Certification of Automobile Repairs from the repair shop that states whether the shop repaired everything the insurance company paid for.

The insurance company can use this information to determine whether any damage that happens in a future accident is new damage or pre-existing damage. The insurance company may reduce your settlement on a new claim by the amount previously paid for damage you did not repair or deny your claim if it determines there is no new damage.

Help With Insurance Claim Disputes

If you are having issues reaching a fair settlement with an insurance company after a car accident claim, Cellino Law can help. Our experienced attorneys will work to get the compensation you deserve for your damages. Contact us today to schedule a case evaluation.



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