Motor burnout insurance - Is this legal?

I had a faulty motor reported in my investment property. I sent out a licensed technician to provide quotation for the job. Technician quoted $2000 for motor replacement.
I contacted my insurance company and after few back and forth (They wanted technician to prepare a causation report with specific details etc) the claim was accepted.
Insurance company transferred $2000 - $500 (excess) = $1500 to my bank account.

When I looked up online the motor only costs $400. Thinking the initial quote may be high, I sent out another licensed technician (from gumtree) and quote came back $900. I accepted and repair is completed.

Am I liable to inform insurance company and return the money back? Or should I just keep quiet?

Note: My question is about legality and not morality.

 

Probably unethical to some but likely to be within your discretion as per your PdS…. keep the cash as you will need it to offset your premium increases for all your linked policies as the Insurer claws back the payout.

If an Insurer is stupid enough to give a Policy holder cash settlements then that is the end of the transaction and they are no longer involved in the process. I know many people that make claims and get cash settlements then either don't actually undertake the repair or use the cash to instigate an upgrade to replace the claim item.

As long as the original damage, quote and causal report were legitimate the you can sleep easy.

 

Cant believe they paid without evidence of payment but I had a similiar issue with GIO. They paid me on a quote. The total received is assessable income. And the actual repair cost paid is deductible. Where they equal there is no tax issue.

You get to pay tax on $600

 

Presumably the Insurer will now be covering the new (cheaper) motor. Was it the same brand as was originally quoted that they paid out on? Will they notice if you make another claim on the motor in the future? I dunno. Just asking.....

 

Its such a small amount they would probably not bother chasing you up , if they became aware of it. At worst they may refuse to renew insurance in the future if they could prove that you knowingly defrauded them.
If you worked in the public service and done that as part of your job , it could be a lot more serious.

 

No and you will find that's why they do cash settlements rather than undertake the repair and payment to their selected contractors. From my experience Insurers have no liability for claims that are paid in cash post the agreed settlement.

So before you accept cash settlements people need to understand the risks which are basically you take on the liability for repairs, repairs can end up costing more than the original quote and if further emergent work is discovered then those repairs are at your cost.

 

Relax.

I think you have a moral obligation to keep the money or in fact try and get more money out of the insurance company if you can.

The bottom line is that the bottom line of your bank statement is higher than the previous day.

Pub bragging rights have been earned. Enjoy your winfall.