Is It Fraud to Receive Money for a Repair and Not Have the Repair Done

[JohnQPublix]

My question involves insurance law for the state of: California

My sister-in-law had an accident a few years back and the front end of her truck was damaged. The insurance company gave her the option of them sending someone out to provide an estimate or she could take it to a shop to get an estimate herself. She opted to have the insurance company send out a rep. They estimated repairs at $2500 and cut her a check. When she went to have the repairs done, the shop quoted her $4000. At the time, she could not afford the difference and she ended up spending the money on a move.

Now, she has damage to the rear of her vehicle. The same insurance company is sending out a claims adjuster to look at it. Will she be in trouble for not getting the front end fixed? She is worried they will see the repairs were not done and charge her with fraud.

Thanks for any advice you can offer.

[Mr. Knowitall]

It's not fraud to fail to repair your car. She took the money as settlement of her claim.

[JohnQPublix]

Thanks so much for taking the time to answer my question. I really appreciate it.

[FullAuto]

If she had left her car at the shop the first time, they would have simply sent in a supplement request and the insurance company would have paid the additional amount. It's also possible she didn't show the shop the insurance estimate trying to get a "better" deal and pocket some money. Had she had showed the shop the insurance estimate, they wouldn't have even written an estimate. They would have simply scheduled the car to come in and billed any additional out. Shop estimates are ALWAYS higher than insurance estimates to make sure they get every penny the insurance company is paying. If a shop estimate is lower, they are cutting corners because the insurance guy sure isn't going to pay anything above what it takes to fix the car.

If the proper repair of the new damage doesn't overlap into areas of prior damage, then the prior will be totally ignored although pictures will likely be taken and the file documented. You'll just get a check for the new damage only. However, if the new damage & old damage combined are enough to make the vehicle a total loss, then they will take the value of the car and subtract the amount of the prior damage to make an offer of what the value of the car was prior to the new loss.

If this is a first party claim (she's filing on her own insurance), then they will usually take the prior damage off the value dollar for dollar since they've already paid it. Also, if this is the case and the adjuster thinks both areas of damage combined may total it, be sure to tell him a prior estimate was written and in the system. Not only will it save him the work for which he'll be thankful, but an estimate a few years prior will likely be lower than a current estimate so you won't get your value hit as hard.

If it's a third party claim (the same company out of coincidence) and it's a total, you can usually negotiate out the value of the prior damage so they only take a percentage of it off the total car value.

[jk]

the only concern is: is there a loan on the vehicle? If so, the lender generally requires the borrower to have the car fixed. It is still not illegal to not get it fixed but it be cause for the insurance company to call for the loan to be paid off since their collateral is now worth less than what is owed.