I know what you’re thinking, “it’s just a small scratch.” Or, “no one else was involved.” It may seem like a good idea to go ahead and pay for minor accident repairs yourself to avoid higher premiums or cancellation, however, this may not always be the case.
When to File a Claim
- The claim will be larger than your deductible. How much larger depends on what you can afford to pay out of pocket at the time. Most car insurance experts agree it’s not a good idea to file small claims, however, not all agree on what the definition of “small” is.
- Your car insurance carrier offers first-time accident forgiveness. Not all insurers offer this policy feature and some have limitations like only being able to take advantage of it after you’ve been accident free for a certain number of years. Know you’re policy and if your insurance has this feature, lean more toward filing a claim.
- The accident results in Injuries or possible injuries. Even if you’re not hurt, you won’t be able to ascertain fully if the others involved are. This could come back to bite you if you don’t file a claim. If there's any chance that someone else involved in the accident could claim they were injured, file a claim to protect yourself from a potential injury lawsuit.
- It’s been a long time since you’ve filed a claim or maybe you’ve never filed a claim. Each car insurance carrier has their own criteria for when to raise premiums. If you haven’t had a recent claim, filing a single one might have no effect on your auto insurance premiums.
- In addition to the time since a claim was filed, if you've had your policy for a long time, and generally make few or no claims against it, there’s a possibility your carrier will be more lenient than they would for a new customer who files claims.
When not to File
- You've had recent moving violations or claims. Driving violations are often used by car insurance carriers to justify raised in premiums, especially if you’ve filed claims recently as well. Premium increases may be triggered if you file several claims within the same policy year. If you have multiple claims, consider paying one of the smaller ones yourself.
- Your car is the only one involved (i.e. you backed into a pole or another stationary object) and after taking a quick survey of the area, you determine it’s limited to your vehicle. Take your car to a reputable collision repair shop and ask them for a ballpark estimate to repair the damage. If the cost is less than your car insurance policy deductible, consider paying for it yourself.
Maybe File If…
- Most states have a mandate that all accidents involving more than a certain dollar amount of damage have to be reported, usually between $500 and $1,000. With today's flimsy bumpers and expensive cars, it's almost impossible for an accident to cause less than $500 worth of damage. Even if not reporting an accident seems financially prudent, it's usually illegal.
- There’s obvious fault by either yourself or the other driver. Chances are you’ll probably face a gradual rate increase. However, this will seem inconsequential to being hauled into court if you didn’t file a claim and the other driver comes after you for damages. If the car accident is clearly the other driver's fault, consider filing a claim to protect yourself in case that driver is uninsured or underinsured. In general, if it isn’t your fault, car insurance premiums don't increase.
- Reconsider checking with your insurance agent and asking them if you should file a claim or not. Some insurance carriers direct agents to inform them if you’ve asked questions about filing a claim. This can lead to increases in your premiums whether or not you end up filing a claim.
- Accidents that involve injuries and medical care can be very complex. People’s health and livelihoods are at stake. Even if it doesn’t seem like that big of a deal in the beginning, at some point you’re going to want access to legal counsel and resources that your car insurance carrier can provide.
- Remember to act quickly and responsibly. Most states have time constraints when dealing with car accidents and their reporting. Take pains to document everything so if you need it, the evidence is there to help prove your case.
- Think about raising your deductibles. The effect will be lower car insurance premiums and it may keep you from filing lots of small insurance claims.
- Ask your auto insurance agent for a copy of their company’s surcharge schedule. It will show how much their rates will increase after a claim.
- Research getting a Comprehensive Loss Underwriting Exchange (CLUE) report. This report informs insurance companies about your claim history.
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