No, I don't think that meets the legal definition of fraud. You are reading too much into the salient nature of these sorts of transactions. It centers around the matter of what it would cost to be made whole again. You don't necessarily have to even get the work done if you own the car and your insurance lacks a specific clause that requires you to use the check only for repairs. Yep, you can, under some circumstances, blow the money on moon pies and strippers. The notion that you categorically can't select a different part, or that doing automatically constitutes fraud seems pretty far fetched which is why I'm looking for some sort of citation. I admit I could surely be wrong, but I remember learning nothing of the sort and "fraud" is a pretty effin big deal legally. I bet there are clauses and policies that discourage working a way to obtain betterment, but that isn't the same thing as insurance fraud.
It might be reasonably cautionary to say be careful and check your state regs, however.
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