Five years ago I claimed hail damage on my car. When I received the check instead of fixing the minor hail damage I used the money to pay the car off. Just recently I was in an accident that left my right passenger side fender demolished. My insurance company tells me because I did not use the money from the 1st claim to fix hail damage that they have to deduct the amount of that check from the cash value of my car leaving me with a 3 digit amount when the estimate to fix the bumper was a little over $1400. So he tells me my car is totaled and I would have to buy it back to keep it. Cash value of my car is $3,0000 minus $500 deductible minus $1800 (hail damage check) leaving me with about $600.00. Can they do this to me? I have been paying full coverage on this car since I paid it off. He told me why are you carrying full coverage on an old car? Help what should I do?

Yes, that is one of the downfalls to not using an insurance check for the repairs it was intended to pay for, the damages are still on the vehicle and thus can reduce the settlement of a future claim.

Your insurance company is now able to deduct the amount of the pre-existing hail damage from their calculation of how much the actual cash value of the vehicle is. They know the exact cost of the hail damage since they previously cut you a check for it to be repaired.

Since your car is being declared a total loss, then your insurer is again correct that if you want to keep the car you would need to pay them the cost of salvage value. Usually this is deducted from your settlement amount, in your case you would need to see if the amount you are left over after the deduction of the hail damage and the deductible are taken into account to see if there is enough left over to buy back the car. Keep in mind if you do buy it back it would now have a salvage title, which may be difficult to find auto insurance for.

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If you want to carry full coverage, meaning liability plus collision and comprehensive coverages, is a personal choice. Many people do take off collision and comprehensive coverages once they own the car in the clear and if the vehicle is so old that the cost of keeping "full coverage" on it does not make sense financially due to the car's actual cash value being low.

To find out about your specific insurance rights in your state you can contact the consumer division of your state's insurance regulator.