Can You Keep the Money From an Insurance Claim?

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Legally reviewed by Jesse Bernheim on December 13, 2022 Jesse Bernheim is a member of the 1-800-Injured network.

Many people file insurance claims after car accidents and aren’t quite sure how they can or should use the money they receive. Are you legally required to use the money to pay for repairs, or can you pocket it and call it a day?

The short answer is that yes, you can choose to do whatever you want with the insurance money, but you need to ask yourself whether or not this is the best decision. If you need the cash more than you need to pay for the repairs, then this might seem like the correct decision.

Fortunately, the money is yours to do what you will with. However, if, after an accident, you are planning to use the money meant for a repair to bridge the financial gap due to injuries or lost wages, the reality is that hiring an attorney is one of the best decisions you can make. An attorney will account for all of the damages you’ve suffered — property damage, medical bills, and impacts on your earnings or financial situation — not just the money it will take to repair your vehicle or replace personal property.

Read on to learn a bit more about insurance claims, and contact 1-800-Injured right away to connect with a personal injury attorney who can fight to get you the money you deserve.

What Does an Insurance Claim Cover?

An insurance claim is a request made to an insurance company for reimbursement of covered expenses. The policyholder makes the request after incurring damages or losses covered by their insurance policy.

Insurance claims are usually made following car accidents, natural disasters, or theft. Once the claim is filed, an adjuster will review the case and determine if the expenses are indeed covered by the policy. If so, the insurance company will reimburse the policyholder for their losses.

In some cases, the insurance company may also cover additional expenses, such as a rental car while the policyholder’s vehicle is being repaired.

What Happens Once the Insurer Pays On a Claim?

For a victim to receive a settlement, they will first need to waive their rights to any future legal action, regardless of whether or not any additional issues arise down the road. This is one reason why it is so important to have a personal injury attorney represent your case — or at least have a lawyer review your settlement offer before accepting it.

Once you agree to the settlement, you will receive a payment that may be a single lump sum, or it may be structured to be paid out over a determined length of time. Whichever settlement arrangement you have, you are free to do what you want with the money after.

Your attorney will collect their fees, which are typically a predetermined percentage of the total amount.

If your settlement includes medical bills, it is likely that your medical insurance company will be paid directly for the total amount they are owed, after which you will be able to collect the remaining sum.

Are You Required to Use a Settlement Payment in a Certain Way?

Once you deposit the settlement in your bank account, you are free to do what you want with the money. Of course, if you have debts or other financial obligations that this settlement is meant to cover, it is in your best interest to settle these debts to avoid future financial issues.

However, you don’t need to use the money meant for a car repair to pay for these expenses. Instead, you can use the money to pay off existing debts or save it for a rainy day. You can even splurge on a vacation — though this might not be the best decision!

The main takeaway is that once you accept a settlement offer, the decision as to how you will use it is yours and yours alone. While it is important to consider the best financial decisions for your future, the choice ultimately comes down to you.

Remember that portions of your settlement are taxable, including any portion of the settlement meant to compensate for lost wages. You may want to set this money aside so you aren’t stuck with a tax bill that you can’t afford.

Situations Where You May Not Receive a Settlement

When you make an insurance claim, you are typically entitled to receive compensation for your losses. However, there are some situations where the insurance company may not have to pay out. For example, if you make a claim for damage that is caused by your own negligence, the insurer may refuse to cover the costs.

Similarly, if you make a claim for an event that is not covered by your policy, you will not be able to collect any money. In some cases, you may also be required to pay a deductible before the insurance company will start to cover the cost of your claim.

Ultimately, whether or not you can keep the money from an insurance claim will depend on the specific details of your policy and the circumstances of your loss.

Tips for Reaching a Fair Settlement or Insurance Award

1-800-Injured is an attorney and medical referral service that helps connect accident victims with legal representation. We know that the true purpose of insurance is to make sure that you are made whole again. Here are some tips from 1-800-Injured on how to make sure that you get the most out of your insurance policy.

First and foremost, remember that the insurance company is not necessarily on your side. An insurance company is a for-profit business, and its purpose is to make money. That means that the people working for the company will do everything they can to minimize the amount of money they have to pay out on any given claim. As such, it is important to be proactive in protecting your own interests.

With this in mind, one of the most important steps you can take after an accident is to hire a personal injury attorney — something our referral service makes easy. Instead of trying to reach out to law firms and schedule appointments while dealing with your injuries, we can handle the logistics on your behalf.

Once you are working with an experienced personal injury attorney, they can guide you through the claims process, fight for the money you deserve, and help you understand the technical and legal aspects of the settlement you received, including which parts of the settlement or award are taxable and which are not.

Contact 1-800-Injured Today

The sooner you contact 1-800-Injured after an accident, the sooner you will have an attorney working towards fair compensation for your losses. Don’t wait — contact us today to set up a free consultation with an attorney in our network!