Auto Insurance Claims: Comprehensive Claim check amount vs actual cost of repair, auto body shop, claims adjuster

Question
Hi Charlie,

My insurance company's claims adjuster cut a check in my name, minus the deductible, for some relatively minor comprehensive (no fault) body damage (two deep scraps of unknown origin on rear of car).  I own the car free and clear.  He told me I could take the car anywhere and he recommended, but did not require, that I endorse the check to the body shop.   However,  I deposited the check into my account thinking I would get the car repaired much later.   But then I stopped by a local auto body shop and asked for an estimate. The owner's estimate was much lower.   Can I get into trouble if I get the repair done and pay the shop directly?   What are my legal obligations?  Am I obligated to tell the body shop owner I already made an insurance claim and pay him the full amount of the check I deposited?  Does the insurance company check to make sure I got the repair done and paid the full price?  Does the body shop report the VIN and cost of repairs into some central database (California)?  I'd like your advice on how to proceed.  It would save me paying the deductible... but it's not worth getting myself - or the body shop owner into trouble.

Answer
A claim does not obligate the insured to repair the property that was insured. While it is illegal to make a profit on an insurance claim, the lower priced estimate may not be repairing the car as the insurance company estimated, which is perfectly all right to do. It is your money to do with as you see fit. And no, you are not required to tell the shop that you made a claim to your insurance company. No, there is no process by which a shop reports the claim to a central database, although there is some reporting from dealership shops to online databases like CarFax.