When to Pay Out of Pocket After a Car Accident

If you're involved in a minor accident, you may consider paying out of pocket instead of making a claim with your insurance. If another driver is at fault, they may offer you cash. Otherwise, if you file a liability claim, their insurance rates could increase.

With some accidents, it's OK to leave your insurance company out of it. Whether it's a good idea depends on how many people were involved, how severe the accident was and the legal requirements in your area.

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When you may pay out of pocket

There's a chance your insurance company will increase your premiums if you file a claim. That could cost you hundreds, or even thousands, over the coming years. If you find yourself in one of the following accidents, think twice before calling them.

An inexpensive, single-car accident

Some accidents only involve one car. For instance, you might bump into your kid's basketball hoop, which dents your door. Or a branch may fall on your car and crack your windshield. These types of claims fall under collision or comprehensive insurance.

Both coverages come with deductibles that can range from $50 to $2,000. If the repair costs are less than your deductible (or even slightly more) you should pay for the repairs out of pocket.

For example, if the damage to your car costs $300 to fix, and your deductible is $200, you would save $100 by filing a claim. But your insurance company may raise your rates, costing you much more than $100 in the long run.

If you pay for the damage yourself, make sure your estimate is accurate. You won't be able to file a claim later if the repair costs are higher than expected. That's because insurance companies require drivers to report accidents and submit claims within a certain time frame. Check your policy for details.

You don't need to report a car accident if you're the only person involved in the accident, no one is injured and you can pay for the medical and repair bills yourself.

If you hit a pedestrian, however, you always need to report it.

A very minor two-car accident (if you trust the other driver)

If you're in an accident with one other driver and the damage is minimal, you could agree not to involve insurance. That way, both of you can avoid rate increases. But we only advise going this route if you trust that the other driver won't change their mind.

Unless you know the other driver or have reason to trust them, we recommend calling your insurance company, even for minor two-car accidents.

Call your insurance company in these cases

Some accidents need to be reported to the insurance company, no matter what.

Someone else is injured

If you're in a car accident and anyone is hurt, you must report the accident, even if the injuries are minor. Medical expenses are costly, and the other person may need to file a claim with your insurance company.

How much you need to pay depends on who was at fault, the degree of fault and state laws.

  • For example, If you live in Missouri, the amount you'll pay is proportional to the amount you were at fault.
  • On the other hand, if you're found to be less than 50% at fault in New Jersey, you do not have to pay anything.

You're best protected if you report the accident to your insurance company (and the police, if necessary) in case you (or the other driver) needs to file a claim. You've spent a lot of time and money finding the best car insurance company, so you'll want their support when you need them most.

A costly accident

No matter how many cars are involved (even one), an accident with a lot of damage needs to be reported to your insurance company. For example, if you drive into a building, there's probably a lot of damage. Odds are, someone will seek payment from you.

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