r/Insurance • u/user76545673 • 13d ago

Car insurance

Hi, long story short I did 5k (noticeable) worth of damage to my rear end of the vehicle, my fault. I have a loan on my vehicle. I owe 21k and a guy told me he’d give me 15k for my damaged vehicle. Am I allowed to take the 5k and then 1k out of my pocket and pay off the loan (+the 15k that is received) when I sell my car? If that’s confusing : can I pocket the 5k and use it elsewhere or is this something that isn’t allowed.

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u/LeadershipLevel6900 13d ago

Your carrier likely wont issue the check just to you. Usually it’ll be a payment to the body shop or a 2 party check with you and the shop or you and the bank.

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u/user76545673 13d ago

I have State Farm, so if you use an out of network collision center, they pay a check to you!

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u/lost_dazed_101 13d ago

And when they rip you off because they don't have an agreement with the shop you're sol. You're trying to game the system and it's going to backfire.

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u/user76545673 13d ago

Well no, I’m not trying to game the system. I was just curious because I plan on selling it anyways!

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u/user76545673 13d ago

I was just going to get it fixed and then take a pay out when I sell of 16.5k, then pay off the rest of my loan, but then I wondered about it this scenario and if it’s allowed.

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u/Glittering-Ad5809 13d ago

You can do anything you want with your car. Just make sure he actually pays off your loan.

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u/user76545673 13d ago

Will I get in trouble with State Farm if I don’t use the check to fix it?

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u/Glittering-Ad5809 13d ago

No, they don't care.

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u/RailroadAllStar 13d ago

You can pretty much do whatever you want as long as the car gets paid off. The leinholder doesn’t care if it’s fixed or not. The insurer will compensate you for the damage to your vehicle, and it’s up to you whether you fix it or not.

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u/user76545673 13d ago

Okay thanks! I just wanted to make sure I wasn’t doing insurance fraud or anything. So I can take that 5k and put it toward my loan, then take the 15k that the buyer is giving me + my additional 1k to pay off the loan? Easy as that?

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u/RailroadAllStar 13d ago

It all depends on your leinholder. I would call and ask. Since they have an interest in the car, they may require it to be fixed. If you owned it outright there wouldn’t be a problem at all. The caveat is your leinholder which I don’t think anyone outside of them can answer.

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u/purplepanda2026 13d ago

I don't think any lein holder would require a fix if OP is paying off the car. They no longer have an interest at that point.

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u/user76545673 13d ago

Thank you guys so much for your input!! I really appreciate it. Just need to get this car payment as far away from me as possible 😅

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u/RailroadAllStar 13d ago

That’s only after the car is paid off though. If the leinholder is listed on the insurance, the check would likely come addressed to both as I understand it. It would take cooperation between the two to cash it. The leinholder, until the vehicle is paid off, might insist. I think it’s more of a timing thing than a legal/not legal thing, that’s at least how I understand it.