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Should you always file an auto insurance claim?

March 23, 2016
Should you file an insurance claim for every accident?

Auto insurance will cover you when you have a car accident, so it seems like it would make sense to call your insurance company for help whenever you are involved in one that causes damage to a person or vehicle. This is not always the case. Most insurance companies will significantly raise your premiums after even one accident. Sometimes, to avoid that premium increase, it is better not to involve your insurance company at all.

As explained by Consumer Affairs, it is difficult for consumers to understand why they would send their insurer a check every month if they are going to pay out-of-pocket for their accidents anyway. There are many situations that would be unwise to deal with on your own. In circumstances where your accident could end up costing you many thousands of dollars, filing an insurance claim is worth the rate hike. Other times, it will be cheaper to deal with repairs solo.

"Sometimes, to avoid a premium increase, it is better not to involve your insurance company at all. “

When not to file a claim

According to Time, you are generally better off not filing a claim when no one else is involved in your accident, like if you skidded into a tree or backed into a stationary object. If you are able to afford the cost of repairs and you are almost certain the accident did not cause any expensive medical issues for you, paying out of pocket may be the best choice. If you cannot afford the cost of repairs, you will unfortunately have to use your insurance company.

Seattle-based publication KOMO News said another time you may not want to file a claim is if the cost of your deductible is close to the cost of repairing the damage. Every time you file a claim your auto insurance company considers you a higher risk for filing another one. It may not be worth being placed in a higher risk category for something that won't cost you much more than your deductible.

"If someone else is involved in your accident, not filing a claim is a huge risk.”

It strongly depends on the situation, though, because if someone else is involved in your accident, not filing a claim is a huge risk.

When to file a claim

It is very important to file an auto insurance claim when other people are involved in the accident.

Consumer Reports explained that in these cases filing an insurance claim, especially if you are at-fault, is key to protecting you financially. Auto insurance typically involves liability coverage that will pay for any injuries you have caused others. According to personal finance resource WalletHub, filing will also help to cover legal fees if someone decides to sue you, as well as loss of income for those who temporarily cannot work and funeral costs for any deaths associated with the accident.

Just because someone seems agreeable and easy to work with at the scene does not mean he won't change his mind later, and by then it may be too late. Consumer Reports said your insurance company could deny your claim if you make it too late because the insurer no longer has the ability to examine the damage. In addition, it can take a while for injuries to show up, and someone who appears fine at the scene may discover an injury later and come back demanding you cover the medical costs.

Time also explained that in general, insurance companies won't fault you when your car sustains damage from something other than accident, like a tree falling on your car during a storm. A situation like that is beyond your control and should cause only a very small premium increase.