When to File a Car Insurance Claim — and When Not To

Auto Insurance, Insurance

After the embarrassment and aggravation of causing a minor accident comes the dread of a possible car insurance rate hike. Even if you have plenty of car insurance coverage, you might be tempted to keep the mishap a secret from your insurance company and pay for the car repairs out of your own pocket.

That might be to your advantage if your car was the only one involved — you backed into a pole, for instance. A car insurance claim can lead to a premium increase, particularly if you have made other claims in the past few years. But if you crashed into somebody else’s car, you’ll probably want your insurance company involved, even if the damage appears minor.

[Car accidents on your record? You might be able to get a better deal by comparing quotes through NerdWallet’s car insurance tool.]

Tell your insurer when other drivers are involved

Let’s say you make a dumb driving move and put a dent in somebody else’s car. Settling the accident with the other driver, without the help of your insurer, is risky. After all, you don’t really know whom you’re dealing with. What if you pay for repairs, and months later he comes back demanding more?

Your liability insurance is there to protect you from lawsuits, and your insurance company is experienced with handling parties involved in an accident, no matter how angry they are. Liability coverage pays for the damage and injuries you cause others, and it pays your legal defense costs if you’re sued as a result of an accident.

To ensure that protection, provide the other driver with your insurance information, call the police, and report the incident to your insurance company. It’s also a good idea to take photos of the damage to both cars before you part ways with the other driver. Depending on the jurisdiction, the police may not come to the scene of the accident if no one is injured and the damage is minor. In that case, file a report at the police station. A police report provides important documentation, and the insurance company will ask for a copy if you file a car insurance claim.

Tell your insurer when serious car damage or injuries could be lurking

Even if the other driver is honest and the accident was only a fender bender, the damage might be more serious than it first appears. Without your insurer’s help, you could end up on the hook for thousands of dollars in repairs. In low-speed crash tests conducted in 2010 by the Insurance Institute for Highway Safety, repair costs per vehicle ranged from $850 to $6,015.

The tests involved one vehicle traveling at just 10 mph and striking the back of another vehicle, which was stopped. The study focused on seven pairs of vehicles, each including a car and an SUV. The damage was often costly because the bumpers of the vehicles didn’t line up with one another. When a 2010 Toyota Corolla rear-ended a 2010 Toyota RAV4, for instance, the damage repair costs totaled $3,852 for the car and $6,015 for the SUV.

Also, your car might have hidden damage. Your collision insurance will pay for repairs, minus your deductible. Your policy likely requires you to notify the insurance company within a reasonable amount of time after the accident. Waiting too long could jeopardize coverage.

Likewise, it can be hard to tell whether injuries are involved at the scene of an accident. Some injuries, such as whiplash, have delayed symptoms that might not show up right away. You definitely don’t want to be held responsible for paying someone else’s medical bills. Let your insurer handle it.

When there is no need to file a car insurance claim

If the mishap involved only you and your car — say you backed into a concrete post, denting the bumper — you might consider paying for the repairs yourself or just leaving the dent rather than filing a claim on your collision insurance. Get a quick repair estimate. If the repair costs less than your deductible, then there’s no point in filing a claim. The deductible is the amount you pay out of pocket toward a repair.

If you purchased only liability insurance and didn’t buy collision coverage, then your policy doesn’t cover damage to your car anyway.

If the repair does cost more than your deductible, you’ll have to weigh whether the insurance payout is worth the risk of a rate increase later. Whether your insurance rates will go up after a claim depends on your previous claims history, your insurance company rules and even your state, which may regulate under what circumstances insurers can add a surcharge to your rate. Surcharges — industry lingo for premium hikes — typically last three to five years, and may gradually decrease over that period.

In New York, for instance, insurance companies can add a surcharge only for accidents in which the insured driver is at fault and that involve injuries or more than $2,000 in property damage.

The only way to find out how much your insurance company will raise rates is to ask for its surcharge schedule or talk to your agent. Bear in mind, though, that the insurance company will make note of the inquiry.

“Auto insurers keep close track of their interactions with customers, so the inquiry will be logged into their system,” says Michael Barry, a spokesman for the industry group Insurance Information Institute. “It is unlikely, however, that an auto insurer would raise a policyholder’s rate because of a single inquiry which did not result in the filing of a claim.”

Whether or not your rates go up after filing a car insurance claim, it’s always a good idea to compare car insurance quotes at policy renewal time to make sure you’re getting the best price. NerdWallet’s car insurance comparison tool can help.

Barbara Marquand is a staff writer at NerdWallet, a personal finance website. Email: bmarquand@nerdwallet.com. Twitter: @barbaramarquand.

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