Legal Question in Insurance Law in California

There are several factors at play here, and it may be that instead of being overpaid, you are being cheated or at least taken advantage of. First I am going to assume that the difference between what the insurance company paid and the cost to repair the car is reasonably modest -- for example, if the company paid you $2,000 and it cost you $1,750. If the difference was in the thousands, that suggests a mistake and could become as much of an ethical/moral question as a legal question.

The first question I would ask you is which insurance company made the payment to you? Was it YOUR insurance company under your car's collision coverage, or as I suspect, the other driver's insurance company under that driver's liability coverage?

If it was your company paying you more than it cost to fix the car, one immediate question you should ask yourself is "Why did my insurance company issue a check for more than it cost to repair the car?" If you had submitted a highly inflated estimate and/or made a fraudulent claim, there could be a problem both with the claim submission and accepting payment. On the other hand, if you were honest and above board, but were able to spend your time shopping around and get something fixed for less than the insurance company itself could have done, you'd be doing nothing wrong by keeping the extra money. Also, perhaps you were willing to accept repairs that were less comprehensive or using less expensive parts than the insurance company would have been obligate to pay for. You also may have been entitled to rent a car during the repair process and did not do so. Further, in some states there is a recognized claim for "diminished value" -- a car post-accident is usually worth somewhat less than a car that never had been in an accident.

If the payment came from the other driver's company, and again assuming that you did not engage in fraud, you should ask yourself "Why did the other driver's insurance company issue a check for more than it cost to repair the car?" The reasons above may apply, but something more is likely at play.

My guess would be the other driver's insurance company recognized that you also had a claim against the other driver for personal injuries you sustained, including possible medical bills, any scar or loss of function -- temporary or permanent, lost wages, pain and suffering, etc. Knowing that the average person is fixated on the need to repair the car, the company may have paid you a bit more than the repair cost in exchange for a general release, releasing it not only from liability for the property damage, but all liability - including liability for personal injury as well. In some cases by paying a few hundred dollars "extra" the company is really buying freedom from litigation that could cost it tens of thousands

Please understand that neither Advocate Law Group P.C. nor I are your counsel and the answers given are not intended as a legal opinion but merely general information and thus may not be relied upon. copyright ALG 2009