Car accidents happen and when they do, there are a few things you should know about car insurance and filing claims. Before reviewing the scenarios of when you should or should not file a car insurance claim, note that your auto insurance policy is typically a personal contract between you and your insurance company where you agree to notify them of an event that could potentially lead to a claim.
However, there are situations where it doesn’t make financial sense to file a claim. Instead, you could decide to pay out-of-pocket to avoid rate hikes. At the end of the day, the final decision comes down to what you think you can afford after weighing out the risks, and whether you are okay with your rates increasing. Let’s take a look at some common reasons why you should file a claim, and when filing a claim does not make sense.
When to File a Claim
You should file a claim with insurance companies in the following scenarios:
If anyone is injured in the accident
You should certainly file a claim if someone is injured, as medical costs can pile up quickly. This is especially important if you are found to be at fault because the other party might sue you. This is where your insurance helps. Drivers are required to carry at least a state minimum amount of liability insurance which covers the other driver and vehicle. Your liability insurance should pay for the damages to the other person’s vehicle and medical bills if you are determined to be at-fault. Likewise, the other person’s liability insurance should pay for your damages and medical bills if they are determined to be at-fault.
If you live in a no-fault state (Arkansas, Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah) and are required to carry Personal Injury Protection Insurance, you should definitely file a claim as your insurance company will pay for you and your passengers medical bills. Six states and the District of Columbia offer no-fault insurance as an option; however, it is not mandatory. These states include: New Hampshire, South Dakota, Texas, Virginia, Washington, and Wisconsin. Check your insurance coverage to see what coverage you have and what you can claim from your insurance company.
In cases of uncertain fault.
If it’s unclear who caused an accident, your insurance claims department will determine liability. That is their job and their area of expertise.
In cases of “total loss” to vehicles or major vehicle damages.
Additionally, you should file a claim if your vehicle is significantly damaged or totaled following the accident. If the damage from your accident is more than you can afford, it’s best to file a claim.
Will My Rates Go Up?
The short answer is yes. In most cases, when you file a claim, your insurance rate will increase, but not forever. According to Zebra, most drivers who file claims are punished with higher rates for three years. Within that time, you can expect to spend an average of $2,061 in additional premiums for an at-fault accident claim. Rate hikes vary from insurer to insurer, so it’s best to fully understand your policy and everything it covers.
When Not to File a Claim
You may not file a claim in the following scenarios:
When you hit the back bumper of another car and caused minor damage to their vehicle.
If you got into a minor accident with another vehicle, there were no injuries and the damage is little to minimal, it might make sense to not file an insurance claim. Filing an insurance claim might cost you more in insurance hikes. Instead, you can agree to settle with the other driver without contacting your respective insurance companies. However, keep in mind that you are not covered in the event the other driver backs out of this handshake agreement and later claims that they were injured in that accident.
If you only damaged your own vehicle.
If you accidentally back your car into a post, you may not want to file an insurance claim. Collision insurance which covers damage to your vehicle from an accident comes with a deductible. This deductible needs to be paid before insurance kicks in. If you don’t have collision coverage, you don’t have to file a claim. Your liability only insurance policy will not cover the damage. Even if you do have collision coverage, it might make more sense to pay for any repairs out-of-pocket. The repairs could cost less than your deductible. Paying out of pocket for minor repairs will also keep your rates from going up.
At the end of the day, the decision to file an insurance claim comes down to whether you can afford to pay for any damage and injuries out of pocket, have a large enough policy to cover any damage and injuries, or whether you’re willing to risk a potential insurance rate hike. It’s important to note, however, that if you ever cause damage to another vehicle or injure another driver, it’s best to contact your insurance provider as soon as possible to avoid trouble down the road.