Are you required to get your auto hail fixed when you have an insurance check?
No you aren’t, however…
When you own your car outright with no liens
You aren’t required to have your hail damage repaired whatsoever. The only problem is that when your car gets hit again with hail, you won’t get paid twice on the same hail damage. Your insurance company will subtract your first insurance claim amount from your second claim. So, if you received a $2000 check and your car gets beat up by hail in a second storm, your insurance company will assess the damage and subtract the $2000 you received with the first claim and give you a check for the difference. You don’t have to get your car fixed in either case.
Keep in mind your insurance company will likely take 2 deductibles when claiming on 2 separate hail claims whether you had the car fixed or not. You will have $500 subtracted from the second check just like you had $500 from the first check. Ouch!
When you have a lien on your car
When you file an auto hail claim and you still owe money on your car, you insurance company will make the repair check payable in one of two ways:
1. They will make your check payable to You AND your lien holder.
Your lien holder requires a receipt showing that all the hail has been repaired before they will endorse your insurance check. Usually, you will pay for the repairs out of pocket and mail the check back to your lien holder for a signature after. Some dent repair companies will hold a personal check until your insurance check is endorsed and deposited in your bank. Your lien holder might also give you the option to apply your insurance check to the balance of your auto loan should you choose not to have your hail damage repaired.
2. They will make your check payable to you AND your repair shop.
This is usually the best route for all parties. If you negotiate a discount with your dent repair shop and your insurance check is more than the quoted repair price, your dent repair shop can simply endorse the insurance check and accept a personal check from you for the lesser amount. Keep in mind, however, your dent repair company will receive a 1099 at the end of the year and will be taxed for the full amount.
Sometimes your insurance company will give you a check ready to cash with no third party endorsement needed whether you have a lien or not.
They do this when your repair amount is less than a specified amount. For example, your insurance company might write all insurance checks directly to you, without any endorsement needed, when the check is less than $2500. We have seen this many times. In my opinion, you will see many checks written for less than the $2500 cutoff even when you have $5000 in damage or more! I appears like insurance companies want you to cash the small insurance check without getting your car fixed because it saves them money ( see Did Your Insurance Company Lowball Your Hail Repair Estimate? ).
