When Not to File an Auto Insurance Claim: Outline, Damage, Coverage, Premiums & Filling Claims

When Not to File an Auto Insurance Claim: Everything you need to know.!!!

An image illustration of filling claim
Learn the strategic considerations of when not to file an auto insurance claim.

Auto insurance is a great way to protect yourself and your car from the financial consequences of accidents.

However, filing a claim is not always the best option.

Sometimes, it might be better to pay for the damages out of your own pocket or avoid making a claim altogether.

In this blog post, we will discuss some scenarios where you might want to think twice before filing an auto insurance claim.

We will also answer some frequently asked questions about auto insurance claims and how they affect your premiums.

When the Damage Is Minor and No One Is Injured

One of the most common situations where you might not want to file a claim is when the damage to your car is minor and no one is injured.

For example, if you hit a mailbox while backing out of your garage, or scratch your bumper while parking, you might be better off paying for the repairs yourself.

Why?

Because filing a claim could increase your premiums in the long run.

Your insurer might consider you a riskier driver and charge you more for your coverage.

Depending on the amount of the claim and the severity of the accident, your premiums could go up by as much as 50%.

Of course, this depends on several factors, such as your driving record, your insurance company, and your state laws.

Some insurers offer accident forgiveness, which means they won’t raise your rates for your first at-fault accident.

Some states also have laws that limit how much insurers can increase your premiums after a claim.

However, in general, it’s a good idea to compare the cost of the repairs with your deductible and the potential increase in your premiums.

If the repairs are less than your deductible, or if the increase in your premiums is more than the cost of the repairs, you might be better off not filing a claim.

When You Have Another Way to Cover the Damages

Another situation where you might not want to file a claim is when you have another way to cover the damages.

For example, if you have a warranty, a service contract, or a roadside assistance program that covers the repairs, you might not need to involve your insurer.

This could save you from paying a deductible and risking a rate hike.

It could also prevent you from losing any discounts or benefits that you might have with your insurer, such as a claims-free bonus or a safe driver discount.

However, before you decide to use another source of coverage, make sure you read the fine print and understand the terms and conditions.

Some warranties, contracts, or programs might have limitations, exclusions, or fees that could affect your decision.

For example, they might not cover certain types of damages, or they might require you to use a specific repair shop.

Also, keep in mind that using another source of coverage does not mean you don’t have to report the accident to your insurer.

You still have a duty to inform your insurer of any incident that could result in a claim, even if you don’t intend to file one.

This is to protect yourself in case the other party decides to sue you or file a claim against you later.

When the Other Party Agrees to Settle Privately

A third situation where you might not want to file a claim is when the other party agrees to settle privately.

For example, if you cause a minor dent in someone else’s car and they suggest paying them cash instead of going through the insurance process, you might be tempted to accept.

This could save you from dealing with the hassle of filing a claim, paying a deductible, and facing a possible rate increase.

It could also save the other party from losing their no-claims bonus or having to pay a higher excess.

However, settling privately is risky and not recommended.

You don’t really know who you are dealing with, and they might change their mind later and demand more money or file a claim against you.

You also have no proof of payment or release of liability, which means you could be held responsible for any future damages or injuries.

The best way to protect yourself and your interests is to report the accident to your insurer and let them handle the claim.

Your insurer has the experience and the resources to deal with the other party and negotiate a fair settlement.

They also have the legal obligation to defend you in case of a lawsuit.

How can you lower your premiums after filing a claim?

There are several ways to lower your premiums after filing a claim, such as:

  • Shopping around for a better deal. You can compare quotes from different insurers and see if you can find a cheaper rate elsewhere.
  • Raising your deductible. You can choose to pay more out of pocket in case of a claim and reduce your premium accordingly.
  • Dropping unnecessary coverage. You can review your policy and see if you need all the coverage you have. For example, you might not need collision or comprehensive coverage if your car is old or has a low value.
  • Taking advantage of discounts. You can ask your insurer about any discounts or programs that you might qualify for, such as a good driver discount, a low-mileage discount, or a defensive driving course.

When should you always file a claim?

You should always file a claim when:

  • The damage is severe and exceeds your deductible.
  • Someone is injured or killed in the accident.
  • The other party’s property is damaged, or their car is totaled.
  • You are not sure who is at fault or how much the damages are.
  • The accident involves a hit-and-run, an uninsured driver, or a stolen car.

FAQs

Q: How long do auto insurance claims stay on your record?

A: Auto insurance claims typically stay on your record for three years from the date of the accident.

However, this may vary depending on your insurer, your state, and the type of claim.

Some claims, such as DUIs or reckless driving, might stay on your record for longer.

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