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- It's crucial to file a claim for major property damage and bodily injuries.
- A claim might not be worth it for one-car accidents when nobody is hurt.
- A bad driving record could increase your auto insurance premiums for three years.
Your driving record is a key component that determines how much you pay for auto insurance. A single accident can really cost you, especially if there's significant property and medical damage. Premiums can increase by almost 50% after an at-fault accident claim, according to an analysis by The Zebra, an insurance comparison website. As you might gather, many drivers make arrangements to pay for damages on their own for smaller accidents, but it's not always possible.
Multiple accidents and severe traffic violations might even prompt an insurer to refuse you next renewal. Increased premiums from an accident usually stay on your record for three years after the claim, according to the Insurance Information Institute. However, things like DUIs and reckless driving convictions can stick to you much longer. If you have to get an SR-22, you could be paying extra as long as the state requires it.
In general, it's better to report an accident to your insurance company than not to, especially if another party is involved. But there are some instances where not filing a claim makes more sense.
When to file a car insurance claim
"Some of the main factors to take into account when deciding whether or not to file a claim include whether property damage or bodily injuries are involved, what type of coverage you have, and the relationship between the parties involved," explains Falen Cox, personal injury attorney at Cox, Rodman, and Middleton.
However, this should not be confused with filing a police report. Especially if you were not at fault or the damage was minor, filing a police report now could protect you from false claims later. Here are some scenarios under which you should almost always file an auto insurance claim:
When only your car is damaged and it needs major repairs
File a claim if your car is badly damaged in a single-vehicle incident. Collision insurance will pay for your repairs for most single-car crashes, minus the deductible. If you don't have collision coverage, you'll have to pay for repairs out of pocket. If you run into a deer or other animal, your comprehensive car insurance would kick in.
Even if your vehicle is operational after an accident, small leaks or damage to certain parts of your engine could cause problems down the road. A repair shop can fix cosmetic issues like a dented bumper or fender as well as internal issues. You also have limited time to file a claim. So be sure to contact your insurer immediately after the accident.
When you damage someone else's car causing significant damage
If you damage someone else's vehicle during a significant collision, and you're at fault, you should always file a claim. If someone else is at fault and offers to pay out-of-pocket, proceed with caution. Unfortunately, it's easy to underestimate the cost of auto repairs. You don't want to get stuck trying to chase them down for reimbursem*nt later.
At the scene of the accident, exchange information including names, addresses, phone numbers, insurance details, driver's license, and license plate numbers. Be sure to take pictures of all documents and report the accident to the police or highway patrol. Then notify your insurer as soon as possible. In short, make sure you document to protect yourself later.
Most states require liability car insurance, which protects you from being sued and will cover at least part of the damage (bodily or physical) that was your fault. Even if the damage seems minor, not getting a police report is risky. Many experts also recommend taking pictures at the time of the accident.
"If anyone else involved in the accident sues you weeks or months later, not having reported the incident will make it harder for your insurer to gather evidence to represent you," according to the Insurance Information Institute's website.
When someone is injured
"You should almost always file a claim if bodily injury is involved," says Cox.
If multiple people are involved in the accident, obtain each person's ID and insurance information. Liability coverage will cover bodily injury if you are at fault. Unfortunately, many injuries don't show up immediately. Whiplash and muscle injuries could take days or even weeks to fully manifest.
Having an open claim and police report to verify the accident helps drivers and passengers protect themselves from the what ifs. Preexisting conditions may increase the likelihood of this happening.
Several states have time limits for filing injury claims, typically 30 days, according to Dan Ferrara, a licensed insurance agent.
When you might not need to file a claim
While filing a claim for damage caused to others is always encouraged, there are instances where you might consider not filing a claim. Here are some of them:
When you have only minor damage to your vehicle
If a minor accident only involves you and your car, a claim might not be necessary. For instance, say you back into your mailbox, which leaves a small dent on your vehicle's bumper. You could opt not to file a claim, as risking increased premiums might not be worth it. For many drivers, the question is how much would it cost compared to your deductible?
Measuring whether your accident was minor is often based on three major factors:
- How fast were you or another involved party going at the time of the accident?
- What part of your car was hit (front damage may be more dangerous than a bump on one of your doors)?
- Did it involve another car and/or driver? Whatever damage your car has is potentially multiplied by the other party's injuries.
The cause of the accident determines how your claim is processed. Some accidents that involve a collision with a deer, street light, or other similar object would be covered by your comprehensive car insurance, not collision. Any claim you make factors into your total auto insurance premiums.
When your claim is less than the deductible
If the repair cost is lower than your insurance policy's deductible, it's probably not worth filing a claim. For instance, if your deductible is $1,000 and there is no property damage, or the damage is less than the deductible, your rates will go up and stay high for at least three years. But you won't get any reimbursem*nt.
Also, suppose a claim is just a bit over your deductible. You would get a small reimbursem*nt while paying significantly higher premiums for a few years. In that case, you may choose to foot the bill if you can afford it, says Ferrara.
You might forgo filing a claim if you hit another family member's parked car and the cost of the repair is less than the deductible. You should still take pictures and document the damage at the time of the accident. However, it's dangerous to leave things open ended with a stranger.
Unfortunately, strangers have changed the story of who was at fault or claimed repairs on unrelated damages or injuries later on. If you don't have pictures and a police report, you have no way to combat this misinformation.
Some states require drivers to report accidents to the police. You should still also notify your insurance company of the accident. While your insurer will note the accident, you're not required to file a claim, says Cox.
If the damage is minimal and you're not at fault
As mentioned, you might choose not to file a claim if the accident was minor and only involved you and your vehicle, as your rates may increase. If you're not at fault in an accident, you may choose not to file a claim as well. If the damage to your vehicle is minimal, the at-fault driver may be motivated to pay you directly. "Even if you're not at fault, filing a claim could still increase your premium," says Cox.
While filing a claim to cover damage to your vehicle is always an option, it may not be your best financial choice. If you do decide to file, go directly through the other driver's insurance as much as possible. Your insurance can only react if notified of the issue by you, the other driver, or a ticket related to your police report.
Be sure to carefully read your auto insurance policy and understand the pros and cons of doing so depending on the circ*mstances. More importantly, make sure you file a police report and get documentation at the time of the accident.
Alani Asis is a personal finance expert covering insurance, retirement, credit cards and more. In addition to writing reviews, guides, and personal finance explainers for Business Insider, Alani was a Mortgage Support Specialist. You can reach her via Twitter at @AlaniAsis.
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