Jessica Sautter has a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Written by Jessica Sautter
Content Writer Jessica Sautter

Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around auto insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Reviewed by Natasha McLachlan
Content Writer Natasha McLachlan

UPDATED: May 24, 2021

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The question often arises as to whether you have to use your auto insurance check to pay for repairs to your car or can you cash it out and choose to use the money for anything else?

The answer is NOT as simple as you may think and many factors will play a role as to what you can do with that big, fat check your receive from the insurance payout. Of course, the issue also arises as to what you should do with the money – is it a best to not claim from insurance in the first place, should you pay for the repairs or is the money best spent on something else?

Let’s first address the issue of what you can and cannot do with the insurance money.

Who Is The Check Made Out To?

Your insurance carrier may request quotes for repairs from at least three automobile repair providers in your area. They will select the quote that provides them with the highest value for money, and you will have to take your car to the chosen repair shop without any choice in the matter.

Do insurance companies send you check?

In this case, the insurance provider will probably pay the repair provider directly or make out a check in their name. That means that you cannot cash the check or use it for other purposes.

Can I do insurance repairs myself?

If the insurance provider makes out a check directly to you relative to the quotes that they received for the estimated cost of repairs, you do have the option to cash it or deposit it into your bank account and use the money for other purchases or expenses.

However, the other factors listed below may still affect this, and you may also want to consider whether this is the best option.

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If you do not own your car outright and are still paying it off, it is less than likely that you will be able to use your insurance money for anything but the necessary repairs. Even if the check is made out in your name, if you cash it and do not pay for the repairs, then you are committing fraud.

However, in most cases where ownership is not in your name, you will not receive a check or the check will not be made out to you.

If there is a lien against the car or a loan, you will need to request permission to cash the check from the lien or loan holder. In these cases, a check may be made out to both you and the loan or lien holder which means that you will require their signature to cash the check. Most loan providers will sign the check and let you go on your merry way assuming that the check will be used to pay for repairs.

However, others may request your signature and retain the check to pay for the repairs directly.

If you do own the car entirely and the check is made out in your name, nothing is stopping you from using the money for something else other than the repairs to the vehicle.

Terms And Conditions

The terms and conditions of your insurance policy, as well as the rules of your auto insurance carrier, will also affect how you can spend your insurance payout. Your insurer may have a policy in place that requires all payments to be made directly to the selected repair shop. Although you can arrange with the auto repair shop to split the money rather than make the necessary repairs, this can be considered fraud and can result in charges being laid against you.

ALERT: Read T&C carefully!

If no such policy is in place and payment is made directly to you, there may still be terms and conditions in place that prevent you from spending the money on anything else other than repairs. If you contravene these terms and conditions, your insurance policy may be suspended, or other penalties may apply.

If you don’t repair the car, it presents a higher risk for an insurance carrier, and therefore the vehicle will probably not be covered until the repairs have been made.

You also run the risk of all future claims from your insurance provider is denied. If you don’t make necessary repairs and the car is in another accident or breaks down, this could be as a result of the lack of repairs and the insurance company will not pay out. Any additional costs that occur due to a lack of or a substandard repair will also not be covered in the future.


It is vital to read the fine print and the terms and conditions regarding the claims procedure and payout before you cash your insurance check and not pay for repairs.

State Laws And Regulations

Laws and regulations regarding auto insurance can vary widely from state to state. In some states, insurance carriers are required to make a check out to the insured party or pay them directly. In other states, it is required that the check be made out to the company making the repairs. The state legislature also covers lien and loan holders in some regions requiring that you name the holder on your insurance policy and that any payouts either be made directly to them or jointly.

Read up on state legislature regarding insurance payouts before thinking about cashing out your insurance check.

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Third Party Insurance Party Payouts

If you were not responsible for the damage to your car and the other party is liable, their insurance will pay for the cost of the repairs. In these cases, the check will be made out to you regardless of whether you own the car fully or not and you can do with the money as you like. However, you do need to consider whether this is a good idea or if having the necessary repairs made is the better option.

Is It A Good Idea To Cash out An Auto Insurance Claims Check?

If you are in the position where you can cash out the check and use the money as you please, there are additional considerations that you may want to keep in mind before doing so.

Co-payment Or Deductible

Be aware that you may be responsible for covering a portion of the cost of repairs or to pay a deductible before your insurance provider pays out. Depending on the amount of the payout and the deductible, you may want to consider whether it is worth claiming from your insurance in the first place, especially where minor repairs are concerned.

Increased Premiums

When you claim from your insurance, it is more than likely that your monthly/annual insurance rate or premium will go up. Once again, consider whether this long-term increase is worth the short-term payout that you will receive.

Consequences Of Not Having Your Vehicle Repaired

If you can have your vehicle repaired for cheaper than the insurance payout, you can keep the difference to spend as you please. However, repairs or parts may be substandard and may result in future repairs becoming necessary which you will have to pay for from your pocket. If you choose not to have the repairs made at all, your vehicle may not operate optimally, may not be roadworthy or totally undrivable leaving you without transport.

Total Write-Off

In the cases of a total write-off, you are free to spend the payout as you wish. Be aware that you will have to give up your totaled car and unless you use the money to replace it, you will be without transport.


If you can spend the money from an auto insurance claim payout as you wish, it doesn’t mean that it is the best idea to do that and it is highly recommended always to have the necessary repairs made by a reliable auto-electrician or mechanic.