In cases where your vehicle is damaged, but no other person or car is involved, you have the choice to file an insurance claim or pay for the repairs yourself, depending on factors like the extent of damage, your deductible, and your insurance coverage. If you have Liability-only insurance, your own vehicle’s damage is typically not covered. If the cost of repairs is lower than your deductible, your insurance won’t provide any reimbursement. It’s important to assess repair costs, deductibles, and potential future premium increases when deciding whether to make a claim or cover the costs personally.
An at-fault accident claim over $2,000 increases car insurance premiums by 42% on average and makes it harder for you to shop around freely. And the second accident in the next 3 years can double your premiums from their current levels. Furthermore, it will keep affecting the premiums for at least three years. In some cases, your current insurer may decline to renew your policy if you have other incidents and tickets on your driving record and this may affect your insurability through other carriers.
When It May Be Prudent to Pay for Damages Out of Pocket
It may not make sense to make a claim on your auto insurance policy in the following situations:
- Liability-only coverage: If you have liability-only coverage your policy won’t pay for repairs to your vehicle. So, your insurer cannot help you anyway.
- High deductibles: Making a claim for a small amount of damage may not be beneficial especially if you have high deductibles, as you might not receive enough money, and it could lead to increased premiums.
- Single car accident with a collision claim: If you are at fault in a single car accident, and the damages are not substantial, it’s worth considering paying for the repairs yourself to avoid significant premium hikes.
- Minor damage included in comprehensive coverage: If your vehicle suffered a minor damage caused by wind, a falling object or another peril, this type of claims may not increase your premium a lot. Nevertheless, it goes on your claim record and may affect your rates more than you think in combination with other claims and tickets. In such cases, paying for repairs out of pocket may be cost-effective, especially if you won’t get much money anyway.
- Minor damage like keying: When the repair costs for minor damage (e.g., scratches) are only slightly above your deductible, you might opt not to make a claim, especially for older vehicles where minor damage may not be a significant concern. You might get it buffed off instead of a full paint job.
It is perfectly legal to fix minor damage to your own car and not tell your insurance company about it, according to David R Galli so there is nothing to worry about if you choose this option. The main purpose of deductibles is to deter policyholders from making small claims. Automobile insurers expect and hope people pay small damages out of pocket. So, if the repair costs are manageable and especially it is your fault, it may make sense just to pay out of pocket and forget about it.
Also, it may not be a prudent decision to use your Accident Forgiveness coverage for a small claim, if you have any. Here are the reasons why;
- You use up your one chance of being forgiven for an accident for a minor damage that will not save you much money after deductibles. So, what happens if you have a large claim next? Suddenly, you have two claims and your rates will increase much more.
- Using your accident forgiveness coverage will tie you up with your current insurer since only your current insurer has forgiven you for the accident but all the other insurers will see it and offer higher quotes for it.
It takes years to qualify for accident-free and good driver discounts and takes only once incident to lose them for at least three years. And your rates may be raised as well as losing the discounts. Keeping your driving records clean and getting the most discounts is more beneficial for car insurance in the long run.
You should first get a couple of quotes for the repairs and find out what the costs are. it’s wise to obtain two repair quotes to ensure you have a clear picture of the costs and reduce the risk of unexpected expenses. If the repair is related to a minor single car collision, it’s generally not recommended to involve your insurance company because such claims are typically considered at-fault. Even a small claim could lead to increased insurance premiums, as it reflects negatively on your driving skills and history.
When You Must Contact Your Insurer About a Claim
If you suffer a large loss that will put you in financial difficulty and you have coverage for it, there is no reason why you shouldn’t make a claim. That is why you buy car insurance and those are the times to use it to is full extend. The point of this post is that you should be pragmatic about it and know that you can pick and choose when to make a vehicle insurance claim and when it is just not feasible.
It’s crucial to promptly notify your auto insurance company if there’s any possibility of injuries in an accident, especially if there’s a chance you may be considered at fault. Injuries may not be immediately apparent, and individuals involved may later file costly injury claims. Additionally, the perception of fault can be subjective. While you may not believe you’re at fault, others might see it differently. Unlike most repairs where you can take your time to gather estimates and decide on making a claim, in cases involving injuries, insurers prefer immediate notification to assess and address the situation promptly.
Furthermore, it’s important to note that in many states, reporting accidents involving damages exceeding a certain threshold, often in the thousands of dollars, is a legal requirement. Consequently, if you choose to report the accident or if a police officer creates an accident report at the scene, your insurance company is likely to have access to this incident on your record. They may consider it when calculating your premiums during the next renewal, irrespective of whether you ultimately decide to file a claim or handle the costs personally. Therefore, it’s advisable to inform your insurer, even if you haven’t made a final decision regarding a claim or covering expenses out of pocket, particularly if you’re uncertain about the best course of action.
Considerations for Making a Small Vehicle Insurance Claim
In most cases, it’s not advisable to offer compensation to other parties if you were at fault in an accident. This could potentially encourage them to request more and still make a claim with your insurance company. While it’s legally not permissible for them to submit a claim with your insurer for damages you’ve already covered, they might argue that the damages exceeded the amount you paid.
However, the decision to accept money if someone offers to pay for your damages out of pocket ultimately rests with you. In such situations, it’s a good practice to obtain at least two repair quotes before accepting any payment to ensure that the amount being offered adequately covers the actual costs of the damages. This helps protect your interests and ensures that you receive fair compensation for the repairs.
Even several small claims in a short period of time can cause concerns with your vehicle insurer and they may refuse to renew your policy if you have moving violation tickets in your record as well. Many companies can ignore a small claim when the policyholder has otherwise a long and clean history but they cannot ignore the second one or in combination with a ticket.
The true impact of small claims often becomes apparent when motorists need to file another claim. A minor incident that seemed inconsequential at first can significantly affect your insurance profile when combined with subsequent claims. This can create a pattern that insurers may interpret as evidence of careless driving, leading to increased premiums or other consequences. Consequently, you might find yourself in a situation where you regret reporting a small claim earlier or feel relieved that you chose not to do so, as it can have lasting effects on your insurance history and costs.
Personal preferences and circumstances play an important role in these decisions. If you do not have the money to cover the costs, you may not have much choice but ask for compensation. Contrarily, if you have a busy schedule and cannot be bothered with filling forms, you would probably rather pay out of pocket. If you really want to save money, shop around and find the cheapest quote.