Should I Pay for a Minor Car Accident out of Pocket?

Sometimes filing a claim with car insurance carriers may not seem like it’s in your best interest, especially when you're involved in a minor fender bender. Read on to help determine when it makes sense to file a claim and when it doesn't.

Two cars in a minor bender bender car accident

If you find yourself involved in a minor accident, you might be tempted to avoid filing a claim. After all, filing a claim can lead to higher insurance rates or outright policy cancellation. Depending on your policy and your accident, paying for damages out of pocket may save money in the long run. But it's not always the best choice.

Making an Insurance Claim vs Paying out of Pocket

Deciding to file a claim or pay out of pocket isn't easy. In some cases, filing a claim is required by law, but not always. You need to evaluate many factors like accident severity, injuries, your deductible, and your claim history.

When Should I File a Claim for a Minor Car Accident?

Consider filing a claim if your accident meets these criteria:

  • Expensive damages: Is the cost of your claim substantially larger than your deductible? If yes, you may want to file a claim. For example, pretend you have a $500 deductible and you cause an accident with $3000 in damages. You have two options:
    • Fork over $3000 out of pocket.
    • File a claim and pay a $500 deductible. Your insurance premiums will likely rise. But if your driving history isn't bad, your higher rates won't cost you more than the $2500 difference.
    If you choose to file a claim, be aware that causing another accident within three years will raise your rates substantially.
  • Other drivers are involved: If your accident includes other vehicles, consider filing a claim. The damages you cause may be more expensive than you realized. That can come back to hurt you. If you're involved in a fender-bender, you have two options:
    • File a claim and let your insurance handle everything, from liability to injuries.
    • Pay for the damages yourself, but risk further complications like lawsuits.
    If you choose to pay for the damages yourself, you're at the mercy of the other driver. They may inflate the repair costs or end up demanding more down the road. If you file a claim, your insurance negotiates for you.
  • Injuries: If there's any chance that you or someone else involved in the accident could claim they were injured, file a claim. A claim will help protect you from a potential injury lawsuit. Injuries to other drivers can cause severe problems for you down in the future. It's better to be safe than sorry.
  • Accident forgiveness: Some insurance carriers offer accident forgiveness. It's a policy add-on that prevents your rates from rising after an at-fault accident. If your insurance plan includes accident forgiveness, you can file a claim without hurting your premium. For more information on whether this add-on is a good fit for your plan, please read our guide to accident forgiveness.

When Should I Pay Out of Pocket for a Minor Car Accident?

Paying for accident damages yourself may be a smart move if these situations apply to you:

  • Recent accidents or violations: Insurance carriers use driving violations to justify raising in premiums. This is especially true if you’ve filed claims recently. Premium increases occur if you file several claims within the same policy year. If you've filed multiple claims, consider paying one of the smaller ones yourself. Individual violations and accidents generally stay on your record for three years.
  • Single car accident: If your car is the only one involved (i.e. you backed into a pole or another stationary object) try to avoid a claim. Take your car to a reputable collision repair shop and ask for a repair estimate. If the cost is less than your car insurance policy deductible, consider paying for it yourself.
  • Minor fender-bender: If it's a minor accident involving another vehicle, like a dent or a broken tail light, consider paying out of pocket. Be aware that this is risky. As mentioned earlier, the other driver can cause you problems in the future through legal recourse.

What Should I Do After a Fender-Bender?

First, act quickly. Most states and insurance companies have time constraints when dealing with car accidents. Waiting could lead to unnecessary financial or legal trouble.

You might be tempted to call your insurance agent and ask for advice on filing a claim. They can use a surcharge schedule to estimate how much your premium will increase after a claim. Be warned: some insurance companies require agents to report when customers ask questions about filing a claim. As unfair as it seems, your insurance carrier can raise rates because of it.

If there is any doubt to how severe damages are or if someone is injured, file a claim. Facing an insurance increase is a pain. But it's substantially better than dealing with the legal issues that could arise from an accident.

For information on the steps you should take after a fender bender, read our article 'What to do if you get in a car accident.'

Make Sure You're Following the Law

Most states require drivers to report accidents with injuries. Many states also require drivers to report accidents with certain amounts of damages – typically between $1,000 and $2,500. Getting into legal trouble for leaving the scene of an accident is more damaging than an insurance increase.

Ask your insurer and check your state's DMV to stay informed about local accident rules and regulations.

If you decide to file a claim and worry your insurer will raise your rates, keep in mind that each insurer treats accidents their own way including how much they raise rates.That's why it's so important to periodically compare car insurance companies and choose the one that saves you the most money.

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Frequently Asked Questions

Q: What is a fender bender?

A fender bender is a minor car accident with little damage to either vehicle. The term refers to the fender, or the frame of the wheel well. It's now synonymous with a small accident that causes superficial damage. A fender bender can refer to more than just the fender. For example, denting a vehicle bumper qualifies as a fender bender.

Q: How much damage does it take for me to be required to report a car accident to an insurance company?

A: It depends on a few factors. If the incident involves another vehicle, you may want to report it to your insurer to protect yourself regardless of how much damage you think was done. In addition, many states require drivers to file claims when a certain dollar amount of damage is done. Check your state's DMV for more information.

Q: Do I qualify for accident forgiveness?

A: Some companies include accident forgiveness on their policies by default. Others charge extra to add accident forgiveness. Insurers may require a certain amount of accident-free time behind the wheel to qualify. Check your insurance plan and contact your provider to find out if you qualify.

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