Expert: Ed McFarland - 2/9/2006

Question
Hello! Thank you in advance for your time - I hope you don't think my question is too silly! Here's the brief story: After receiving an estimate on damage to my car, my $500 deductible was reimbursed by an insurance company who offered such a service through a loan. Later, I found a body shop to do the work for less than $500, so in essence, the insurance company gave me $500 that they didn't have to. Though I could live with that, I'd hate to think that taking the $500 could have shorted any specific employee at the insurance company, e.g. reducing or eliminating someone's bonus or the like.

Could such an amount hurt an employee in such a specific manner, even at what is, I assume, not excactly a mom-and-pop size company? I mean, at the end of the year, say this company pays out one fewer $500 reimbursement claim. Why is it flawed logic to think that that $500 could have gone directly to an employee's Christmas bonus? After all, it's $500 that wasn't there before.

As I said, the initial estimate was legitimately over the $500 mark - I wouldn't have received a reimbursement otherwise - so everything's on the up-and-up, but I still don't like to think of any single employee suffering monetarily if I could help by giving it back. I hope with your accounting experience you help me to find the error in my logic, so I don't feel guilty for Joe Shmoe in the mailroom who didn't get his holiday bonus last year! Thank you so much. Take Care! --Sam

Answer
no, that's why they are called estimates. Happens all the time, usually it is that the way around, more damage gets found.

Since they floated you a loan to cover the deductible, use the wind fall to pay it off and avoid any interest charges.

Good luck