There’s a reason why people pay hundreds or even thousands of dollars every year on car insurance policies. Getting in a car accident is terrible in itself, but the cost that comes later to cover the repairs and medical treatment could leave you bankrupt. Auto insurance policies are great to save you from the enormous cost of getting your car fixed after an accident or paying the medical bills for your treatment. But making an insurance claim might not be the best option every time. 

Sometimes, it is better to skip making an insurance claim and just pay from your pocket. It might sound confusing but there are good reasons for it. This article will describe all the possible instances when paying out of pocket for your car repairs is a better option than making an insurance claim. Let’s get started.

Understanding the Basics 

Before we get into the meat of the matter, let’s understand a few terms related to auto insurance. 

Deductibles: Every auto insurance policy that covers your vehicle’s damage comes with a deductible. A deductible is an amount that you’ll have to pay before the insurance company pays the rest. It is usually a percentage of your total coverage and you can choose how much deductible you want to have.

Let’s say that the cost of repairs for your car is around $5,000. If you set the deductible to be $1,000, you’ll have to pay a thousand dollars first, and then the insurance company will pay $4,000. If the cost of repairs is less than your deductible amount, the insurance company will not pay at all. 

Claims increase the cost: Many factors affect your auto insurance rates. If you have been looking for lower rates for car insurance but could not find any, a possible reason for that could be previous insurance claims. There are other factors as well, such as driving records and traffic violations. But making an insurance claim will increase the cost of your car insurance policy without a doubt. 

Now that these two factors have been established, let’s look at all the instances when making an insurance claim is a smart move, and when it is a mistake. 

You Get Hit by Other Vehicle

Let’s say that you are driving, maintaining the speed limit and suddenly another car hits you. No matter how much damage you can see in the car or if you have sustained an injury or not, you need to contact the cops, and your insurance company and get the insurance details of the driver at fault.

You can claim the other driver’s liability insurance policy and get coverage for repairs and medical treatment. Claiming someone else’s liability coverage will not increase your insurance rates and there are no deductibles involved.

So even if you do not think a claim is needed, exchange insurance information, contact the cops, and take pictures of the accidents. Your car might be damaged from the inside, or you might have sustained injury, both of which will require a good amount of money to fix. So make a claim. 

You Hit Your Car with Another Vehicle or Object

What if the accident is your fault? What if you were driving carelessly and hit a tree or another car? Should you make a claim? This is where collision car insurance comes in, and different situations will dictate whether you should make a claim or not. 

When you Hit an Object

Let’s say that you hit a tree or a wall and no other person or car was involved. In this case, you can make a claim or skip depending on the damage. Coming back to deductibles, if the damage to your car is too much, and you think fixing it will cost you more than the deductible amount, then you should use your collision insurance policy and make a claim.

But, and a big but, make a claim only if the cost of repairs is much higher than the deductible. Let’s say that your deductible is $1,000 and the cost of repairs is just $1,300. Then making an insurance claim would make little sense. This is because after the claim you might have to pay a lot more for insurance premium. And over the years it will surpass the $300 you’ll get from your insurance company. So making a claim, in this case, is not worth it. 

But if the cost of repairs far exceeds the deductible, then you should make the claim.

If You Hit Another Car

If you get in an accident with another average car, then there’s no way of escaping an insurance claim. The other person will most probably make an insurance claim against your liability insurance and that will bump up your auto insurance rates. So the best thing to do in this case would be to make a claim against your collision insurance policy to cover the cost of your vehicle repair or make a claim against your injury protection plan to cover the cost of medical treatments. 

Why Paying out of Your Pocket Makes Sense? 

When the cost of repairing the damage is too expensive, or when you are making an insurance claim against someone else’s insurance policy, then making a claim makes sense because there are hardly any repercussions. But when there are repercussions, you should avoid making an insurance claim. 

  • If the cost of repairs is under the deductible limit, then do not make a claim
  • If the cost of repairs is slightly higher than the deductible limit, even then do not make a claim
  • If you have not made any claims for a long time and have no-claim bonuses, then do not make any insurance claims if the cost of repairs is not too much. 
  • However, you can get an accident-forgiveness add-on and then claim if the cost is too high. Accident-forgiveness will not increase your insurance rates even after a claim. 

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