Auto Insurance

Paying Out of Pocket After a Car Accident: When You Should Do It

You’ve bumped into a pole; there’s a little damage but nothing too bad. Should you even call your insurance company?

That is a question faced by countless drivers every day and the answer is not always so straightforward. The short of it is yes, there are situations where it is ok, and even more beneficial, to not call your insurance company after damaging your car. What are some of those situations? 

The Types of Accidents You Can Pay For Out of Pocket

Filing too many claims through your insurer can cause your rates to soar; costing you hundreds if not thousands over the coming years. If you find yourself in the following situations, think twice before calling them up. 

An Inexpensive One Car Accident

Bumping into a pole, your kid’s baseball putting a dent in the side: these are situations that cause some damage, but nothing that’s too expensive to fix. Damage you inflict to your own car is always handled through your collision or comprehensive insurance. Both coverages come with deductibles that usually range from $50 all the way up to $2,000. 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 $100 by filing a claim, but your company may decide to raise your rates, costing you more money in the long run. 

The only thing we would advise in this situation is to make sure your estimate of the damage is accurate. Insurance companies expect claims to be submitted in a timely manner. If you wait too long, your claim may not be accepted. If the damage turns out to cost more than your initial estimates, you may be stuck paying for it. If you have a local auto body shop, check with them to be sure the damage will be inexpensive to fix. 

If you are injured in a one car accident, so long as you can afford the medical bills either out of pocket or through your health insurance, you do not need to report it. If you hit a pedestrian however, that always needs to be reported. 

A Very Minor Two Car Accident 

In an accident with no more than two drivers where neither is injured and the damage minimal, you can both agree to not call the insurance company. The benefits of not calling your insurance company are the same as in the situation above. Admittedly however, it is a bit trickier with an extra driver. We would advise you only do this if you trust the other driver. 

The reason being, the other driver can at any time renege on their agreement to not involve the insurance companies. It may not be wholeheartedly , but say the damage to their car turns out to be more costly than originally thought, or their neck starts to hurt a few hours later. The intent could be malicious as well, where they try to take advantage of the agreement by blaming you for damage to their car you didn’t even cause. 

It will be disadvantageous if it comes down to them having their insurance company behind them, and you by yourself. So, unless you know or really trust the other driver, we would not recommend you not call your insurance company even in the most minor of two car accidents. If the other driver is trustworthy however, then this situation would be ok. 

The Types of Accidents Where You Should Always Report it 

There are a few accidents where no matter what you need to report to your insurance company. What are they? 

Accidents Where Someone Else is Injured 

If another driver involved in your accident is injured, even if its minor, it needs to be reported. Medical expenses are costly no matter where you go in the U.S. If they need to get themselves checked out due to injury, most likely they will come after you to pay the bills. 

How much you need to pay depends on how much at fault you were, and that depends on which state you live in. For example, If you live in a state like Missouri, the amount you pay is proportional to the amount you were at fault. For car insurance in New Jersey on the other hand, if you are found less than 50% at fault, you do not have to pay anything. 

What does this all mean? It means you do not want to be defending yourself on your own. You spent a lot of time and money finding the best car insurance company, so you will want them behind you to insure the other driver’s company is not taking advantage of you. 

Accidents Where the Damage is Costly 

Whether it's a one or multi-car accident, if the damage is large, you must report it. Your car may even be relatively unscathed but if you caused a lot of damage, you need to report it as well. Odds are, in such a large accident, even if no one is injured, someone is going to seek recompense from you. You will want your insurance company on your side for the same reasons you want them if someone else was injured. Your insurer doesn't want to pay out such a large claim either, so they're going to use their resources to fight and reduce your exposure.

Craig Casazza

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