Auto Insurance

3 Reasons Not To File A Claim For That Fender-Bender

If you’re unlucky enough to suffer a serious car accident, you’ll almost certainly elect to have your insurance company cover the cost of the mishap, since those bills will probably far exceed your deductible on the policy.

Indeed, after crashes in which anyone is injured or the damage is clearly major--as in two or more cars are involved, with at least one not driveable afterwards--letting your insurance company know is either required or highly recommended.

With plenty of other crashes, however, you may want to simply cover the cost yourself. Here are some conditions and situations when that option can make sense. The more these apply to your mishap, the more you should consider a DIY accident resolution.

The Damage Cost Is Close To Your Deductible

Any damage you do to another vehicle is covered under the liability component of your policy, while damage you inflict to your own car will handled through your collision or comprehensive insurance, assuming you have such coverage (some people drop it for older vehicles).

All of this coverage comes with deductibles that range from $50 or so all the way up to $2,000, although $200 to $500 is the most common figure. If you estimate the damage inflicted to your car to be below your deductible, or even slightly above it, you should just handle the repairs out of pocket. If the damages are $300, but the deductible is $200, you would save just $100 by filing a claim, and your premiums could easily rise by more than that in the long run (as we cover below). However, before going the pay-it-yourself route, it’s wise to ensure your estimate of the damage is accurate. Repairing the damage from even a minor fender-bender can be pricier than many car-owners expect. If you have a local garage or auto body shop you trust, get a written repair estimate, and discuss what, if anything might cause the final bill to be higher than your initial estimates, and by how much.

If the final bill is indeed unexpectedly high, by enough that you in fact decide you want to claim for it, you might be unable to do so. That’s because insurance companies have time limits on how long after an accident you may may run out the clock for reporting the accident to your insurance company; check your policy for this information.

It’s A Solo Mishap – You Alone Are Involved

In an accident with no more than two drivers, where neither is injured and the damage appears to be minimal, you can both agree to not call the insurance company. There are, however, several reasons to be cautious about doing that.   The first is that the other driver can at any time renege on their agreement to not involve the insurance companies. That might have been their plan all along--you are, after all, putting your trust in someone you just met when your car and theirs collided. More likely, though, they may have experienced neck pain, say, hours or day after the collision, or have discovered that the damage to their car turns out to be more costly than originally thought.

Even seemingly minor fender-benders are notorious for being far pricier to fix than most drivers would expect--the second reason for caution about reaching a no-insurance-involved arrangement with another driver at the scene of a crash. To illustrate just how costly fender-benders can be, the Insurance Institute for Highway Safety (IIHS) staged seven low-speed (10 mph) collisions between a number new vehicles. However minor the damage the appeared, the median cost to repair the damage to both cars in the tests was a hefty $3,000.

The upshot here? Not involving the insurance company is best reserved for mishaps that involved your vehicle alone, or one in which you know, or have other reason to trust, the other driver.

You’ve Filed For Other Accidents

Going it alone on a minor solo crash can spare you long-term pain. That’s because filing too many claims through your insurer can cause your rates to soar, possibly costing you hundreds if not thousands over the years following the claim.

The impact of making a claim varies by the state, the insurer and how long it is since you submitted a claim, if at all. But the hikes can be hefty. ValuePenguin researched rates in multiple states for a 30-year-old male who drives a 2014 Toyota Corolla and has an accident that he claims on his insurance. We found his rates would increase sharply (by an average of a third) after an accident in which there was both bodily and vehicular damage. But the hike was only slightly less-- an average of a little under one quarter--with accidents that involved only damage to property or a vehicle.  Thus, if his yearly premium was $1,000 before the accident, it could become $1,230 after an accident in which vehicular damage alone was involved.

Craig Casazza

Craig is a former research analyst at ValuePenguin covering property and casualty insurance, including auto, homeowners, renters and motorcycle insurance.