What to Do If Your Insurance Check Exceeds Your Car Repairs

Following a car accident, your car insurance company or the other party’s insurer should cover the cost of your damages. Damages may include but are not limited to medical expenses, lost wages and vehicle repairs.

While some insurers will pay service providers, such as auto shops, directly, others may send checks to insurers. If the insurance company does decide to send the check to you, and if the check ultimately exceeds the cost of repairs, you may wonder what you should do with the excess funds. Can you keep them, or do you have to send them back to the insurance provider? The answer depends on the reason for your overpayment, state law and other factors.

Insurers Rarely Make Payout Mistakes

It is common for insurance companies to offer less than a claim is actually worth, but it is rare for them to offer more. This is especially true when it comes to vehicle repairs.

Before issuing a check for vehicle repairs, the insurance company will either send an appraiser to your home or ask you to take pictures of the damage yourself and submit the photos via an app. The adjuster will assess the damage, value it and then let you know approximately how much repairs should cost. However, it does not determine an amount based on its assessment alone.

Once the adjuster determines that your vehicle did, in fact, sustain damage and that said damage was the result of the accident as you described it happening, it will ask you to seek out at least one repair estimate. If the insurer does not like the number, it may ask you to get another estimate. Know that the insurer will likely send a check in the amount of the lowest bid.

All this being said, insurers rarely make mistakes when calculating insurance claims. It is unlikely that yours will issue a check for more than what the repairs will cost you.

First, Make Sure That Your Check Actually Exceeds the Cost of Repairs

If, for some reason, you do receive a check for an amount that is higher than what the repair shop quoted you, make sure that the check does exceed the final cost of all repairs. If you bring the excess amount to your insurer’s attention before you receive a final bill for repairs, the company may demand the money back. Once you give the money back, you cannot reclaim it, even if the final bill does come back much higher than the initial quote.

There are some steps you can take to ensure the check you receive covers the entirety of your expenses. Those are as follows:

• Determine Whether You Already Paid for Services Out-of-Pocket: Say the mechanic shop quoted you $7,000. Your insurer issues a check in that amount, but the final bill from the repair shop ends up being $5,500. Before you contact your insurer about excess funds, consider whether you paid for any services out-of-pocket. Such expenses may include towing, transportation, a rental car and the like. Once you add up these expenses, you may discover the check is just enough.
• Check Out Your Car’s Pre-Accident Value: Some insurers will pay insureds for the depreciation that a collision causes. If your vehicle’s pre-accident value is higher than its post-repair value, your check may account for this loss.
• Consider Whether the Mechanic Failed To Make a Repair: It is highly possible that the shop to which you took your car failed to make all the necessary repairs. If this happens, it is understandable that your check will be higher than your final bill. Before you contact your insurer, go through the work order with the mechanic to make sure he or she did, in fact, complete all the required repairs.
• Inquire as to the Purpose of the Check: If the necessary repairs will end up costing you more than what your vehicle is worth, your insurer may deem it “totaled.” In this case, the company may issue you a check for the value of your vehicle and not repairs.

If you make all these considerations and determine that the check amount is still more than the value of repairs, it may be time to contact your insurance company.

Tell Your Insurer About the Excess Amount

Insurance companies typically handle issues of overpayment in one of two ways. In the first instance, your insurer lets you keep the excess amount. This typically occurs when part of your settlement is intended for an unspecified purpose, such as services you may have paid out of pocket or a stipulation in your policy.

In the second instance, your insurer asks you to return the money. An insurer will do this if it cannot determine any legitimate reason for the overpayment.

While most claimants hope that their insurers opt to let go of the excess amount paid, the risk of having to return the money should not deter you from informing your insurance company of the excess funds. If you keep the money without saying anything, and if your insurer finds out, one or a handful of consequences may occur:

• Your insurer may demand that you repay the full excess amount, even if you already spent it.
• Your insurer may raise your premiums to recoup the excess amount and/or drop you as a client.
• Your insurer may sue you.
• You may face criminal charges of fraud.

Given the severity of these consequences, the best thing you can do if you receive excess funds is to inform your insurer of the issue.

How To Use Excess Funds You Get To Keep

If your insurer does allow you to keep the excess money, you may wonder if you must use it on vehicle repairs. The answer is no. You can use the extra money in any way that you please. If your vehicle has other, non-accident-related issues you wish to take care of, you can use the extra funds to do so. If you want to put the money in savings, you may. If you wish to take a vacation with the money, your insurer cannot stop you.

That said, know that, because insurers are diligent in the appraisal process, any excess funds you do receive are likely to be minimal. You may be able to buy yourself a nice dinner with the money, but taking a vacation seems far-fetched.

Should You Consult With a Car Crash Attorney?

When your insurance check exceeds the cost of repairs, you may wonder if you should consult with an attorney regarding how to proceed. In most cases, the answer is no, as your insurer should be able to advise you on how to proceed. Given that you contact your company about the issue, you will not face any adverse consequences.

However, say your insurance check is for less than the cost of repairs or, worse, that it never arrives. In these instances, it would be in your best interests to consult with an informed car accident lawyer. A skilled lawyer can assess your damages, determine how much more the insurer owes you and take appropriate action to recoup the missing amount. If you are the subject of unfair treatment from your insurance company, do not let it go unnoticed — contact Mike Morse Law Firm to explore your options via a free case evaluation.