So you got into an accident and there's a big dent on your car's front fender. You're waiting to receive a check from your insurance company. You think you can live with the damage. Can you simply spend the money rather than use it to pay for repairs? Some drivers choose to forgo repairs because they have other financial priorities, or because they are unable to pay the deductible on their collision or comprehensive claim. (See " What if I can't pay my deductible?") Whether you can simply cash the settlement check depends on many things, such as who holds the title to your car, where you live and which insurance company you use. The check you're so eagerly awaiting may not be written out to you alone. And taking the money without fixing the car might spell trouble down the road.
If your car is leased or you have a loan
If you lease or have a loan on your car, in the majority of cases your insurance company will write a check to both you and your leaseholder or lien holder. (See " Faster checks, but slower repairs.") What does that mean for you? That may mean that you will have to visit your bank to get the check co-signed, or you might even have to mail your check to an out-of-state financial institution. All of this extra legwork, of course, can delay the repair of your car. In any case, you have to fix your car, says Pete Moraga, communications specialist with the Insurance Information Network of California in Los Angeles. "If the check is made out to you and your lender, you have to fix the car because the lender is going to want to make sure that he protects his investment, as the bank is the co-owner of your car and it has an interest that your car gets fixed," Moraga points out. (See " Low, low payments -- on the car, anyway.") "The lender is not only going to want to protect his investment; he wants the car to be put back in the same condition as before the accident," Moraga says.