Can I cash out my auto insurance policy after an accident?

Auto insurance policies can't be cashed out like life insurance policies. They will pay only for damages incurred during an auto incident.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 15, 2021

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Things to Remember...

  • Auto insurance policies cannot be cashed out like life insurance policies
  • Auto insurance payments do not increase in cash value like life insurance payments
  • In auto insurance terms, cash value is the asset’s replacement cost minus depreciation

No, you cannot cash out your auto insurance policy after an accident, or at any point in time. That is something that only applies to life insurance.

Unlike a whole life insurance policy, your auto insurance policy doesn’t accrue cash value.

You make premium payments to the auto insurance company to protect the value of your auto or motorized vehicle.

As long as you make regular premium payments on time, your auto insurance protection remains in force.

When you have a car accident, the auto insurance company pays to have your car repaired or replaced.

Use your ZIP code and the free tool to compare online auto insurance quotes today!

Why can I cash out a life insurance policy but not an auto insurance policy?

Unlike whole life insurance coverage, regular auto insurance premium payments don’t increase the cash value or loan value of an auto insurance policy.

If you own a whole life insurance policy, and you’ve accumulated cash value by making regular payments for years, then it’s possible to withdraw cash from the policy.

Some people withdraw cash value as a loan from a whole life insurance policy when they need ready funds, according to authors Robin Leonard and John C. Lamb in Solve Your Money Troubles.

Note that the life insurance policy must be repaid the amount of cash withdrawn, or your heirs won’t receive the full death benefit.

When times are tough, it’s possible to withdraw cash from your whole life insurance policy to pay necessary debts and obligations, such as auto insurance.

Interrupting your auto insurance coverage now with the idea of buying auto insurance later is almost certain to cost you more money.

In the interim, being in an auto accident without auto insurance could mean criminal charges, fines, and jail time if convicted.


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Is an auto insurance policy or a whole life insurance policy a good investment?

According to Eric Tyson, author of Personal Finance for Dummies, buying whole life insurance is a costly way to save money.

He compares a $500 per year insurance premium to a new cash value policy costing eight times as much!

Auto insurance, like term life insurance, pays out only on an event, such as an auto accident or death.

While your auto insurance policy isn’t an investment vehicle, it is a financial planning tool. Buying auto insurance is required by law in 49 out of 50 states before you drive a car.

In the event of a serious auto accident that results in serious property damage, personal injury, or death, auto insurance can help you pay what’s owed.

If you’re at fault in a vehicular accident, auto insurance helps you repair property damage and receive medical care.

Car insurance also provides a funeral benefit if the accident causes death. Many insurance companies offer auto insurance along with homeowners and regular health insurance.

What is cash value as it applies to auto insurance?


Keep in mind that items in your vehicle that are destroyed as a result of an accident may not be covered by your insurance policy, according to authors Lawrence J. Gitman and Michael D. Joehnk of Personal Financial Planning.

That’s why valuable electronics, personal items, accessories, or anything else of value should be insured.

The authors also recommend frequent adjustments to the cash value of significant assets, such as your auto.

Smart consumers check competitive auto insurance quotes every year. Why pay too much for auto insurance coverage you need?

Start by entering your ZIP code now to save money on auto insurance rates!



Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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