Can an insurance company take money away after I cashed the check they gave me?

Question

I bought an 03 mustang convt about a month ago for $10K, but it was a salvaged vehicle that had been restored.
2 weeks after having it, a lady ran a red light and t boned my car. Her insurance company , State farm, evaluated my car and deemed it a total loss.
Anyways, they paid me $13K for the car. I never said on the phone that it was salvaged when the insurance agent made the offer. They had the VIN number though. I had to go a state farm office to pick up my check, and give them the registration of the car, which did say on there it was a salvaged vehicle. They were busy and rushing that they didnt really look at it though. My insurance company (AIG) said that since it was already a salvaged vehicle that the pay out MIGHT only be 50-75 percent of actual cash value.

Thankfully I wasnt hurt at all, and came out 3 thousand ahead from it but im wondering if state farm actually looks at the paperwork later, can they demand money back from me?

Answer 1

No, since they had all the information available to them at the time the claim was settled. If they had asked and if you had lied then they would have a case.

Chock one up for the "little guy." Glad you weren't hurt!

Answer 2

Since today is only Nov 27th & you said your policy cancelled "5 days prior" to your call, I have to assume one of 2 things - 1 - your cancellation date was Nov 20th or 2 - your renewal date was Nov 20th and you have a company like Progressive. They do not give the 10-30 day cancellation notice (depending on your state laws) on the renewal date (they would notify you on the renewal bill that this is the final notice & if payment is not received, the police expires with no further notice). But, Progressive (at least the Progressive written by agents, I don't know about direct) will allow you to pay up to 30 days after the renewal date & they will issue your renewal with a lapse (starting the day AFTER the payment is received). You didn't get screwed out of any money. The insurance company has to by law send you back any unused premium based on prorated (only charged for actual days covered) or short rate (penalty for cancelling before the policy term is up), some charge a straight cancellation fee (like Progressive which is $40). If I were you, I would call an independent agent & change from the company you have. This is when agents can help you. I have had policies reinstated when the money was received after a cancellation date. I call the company & explain the situation & they agree (or not sometimes) to reinstate. If one of my insureds had the same situation, I would be on the phone to the company begging for reinstatement. As others have said, the insurance companies don't see the checks, there is an automatic check scanning machine they use, they put in a stack of checks with the bill stubs and just scan the routing #s, account #s and amounts. Our agency still has an agency check (the insured paid cash) we sent to AIG that was never credited to the insured's policy. We sent them the front & back of the check & they denied ever cashing it. The company endorsement was smeared & was hard to read, they denied they had the money & we as an agency had to "eat" the premium & send another check.

Answer 3

No worries...they knew all about the salvage title when they made you the offer. This is just standard claims practice for State Farm -- they have the resources and staff available to close claims quickly and with as little hassle as possible for the customer, meaning that sometimes they take the hit for poor salvage returns on total losses. That's another reason people should always consider being insured with large, well established companies with excellent track records in claims.

Answer 4

Yes, they can, and will if they catch it. That's why you should avoid getting vehicles with salvage titles. The insurance companies will take your full price money to insure them, but only pay out a percentage of the value of a non-salvage title in case of loss.

Added 12:31 Keep in mind you are supposed to have your loss taken care of, not make a $3 K profit as you admitted you made on the vehicle. Give me as many thumbs down as you'd like people, but I'm right. It was misrepresented and they can (not necessarily will) ask for the part back that was given in error.

Happy New Year Ya all.

Answer 5

Yes, they can. If you refuse to return the funds they demand then they'll have their Subrogation Department (collections) pursue the requested money from you. This could result in a lien being put on anything you own (home, car) or a judgement on your credit, which could affect future loans, etc.
-I've seen it happen. You're correct in that they should have caught the error and noticed your vehicle as being considered salvage, however, they have the right to pursue the overpaid amount and will persist until repaid or your credit is affected in some way.
-The statute of limitations for property damage claims varies from state to state and in some states it's four years. Check your state's statute of limitations and mark your calendar !
-You're correct in that salvaged vehicles normally cause depreciation of about 50%. Insurance companies will sometimes call three car lots in your area to determine the average depreciation and apply it to your vehicle's value.

Answer 6

Let them try!! state farm used to be a ok co.they gone downhill in the last few yrs.

Answer 7

If the car was properly repaired, passed current standards for safety and body integrity, then there is no cause for evaluating it lower. It was worth what they offered and you accepted.

Answer 8

no your fine, to get a salvage title the car has to pass an
inspection in your state. ins co has to pay

Answer 9

if they do pay them a dollar a month till paid in full. don't think the will. good luck

Answer 10

They may try. The fine line will be their inattentiveness vs. any misrepresentation you may have made.