what he does with the money is irrelevant. He doesn't have to repair his vehicle unless he has a loan and part of that contract requires him to maintain the vehicle. It still wouldn't make any difference to you.
as to the amount; as I said; you can either pay or dispute it. If you refuse, he can sue. He will be required to show proof of his damages to the court and since your daughter is at fault, she will have a judgment for whatever the guy proved to the judge. If he can convince the judge his damages are $1800, then that is what he will be awarded. You, let me correct that; your daughter can argue the damages are not that much. She will have to support her argument.
Personally, I believe it would be better to go through your insurance than go to court. A judgment will be on your daughters credit record for as long as the judgement is valid or 7 years whichever is longer. Haven't checked your states laws on the statute of limitation for a judgment.
Before you go that far, you might try negotiating with the guy and ask him to show the damages are valid. Maybe he can show you something you are missing.

