If you owned the car in the free and clear you could do whatever you wish with the settlement money. Generally though when you still have a lien holder with your car they will require you to get the vehicle repaired. The lien holder still has an interest in the vehicle and wants to protect it by having the car repaired and in the best condition possible.

If your lien holder does not make you sign paperwork, when they sign the check over to you, stating that the car must be repaired you should ask them if it has to be fixed. If you do not get the vehicle repair and have to make a claim later, your auto insurance company would very likely make deductions from that settlement for the previous hail damage that was not repaired.