After an automobile accident, you have to decide whether you want to file an insurance claim or pay out of pocket to fix your damaged vehicle. The option that you choose should depend on several factors.

Before you decide to file a claim or spend your own money, take some time to consider how much the collision will cost and how much your insurance premium will increase.

Pay Out of Pocket When Your Car Has Minor Damage

When you file an insurance claim, the insurance company sees you as a bigger risk than you were before the accident. In response, the insurance company will probably increase your premiums. If the increase costs more than paying for repairs out of pocket, then you shouldn’t file a claim.

In most cases, filing an insurance claim can increase your premium significantly. One study finds that premiums go up an average of 44.1% after drivers file claims. If you pay $1,000 a year for your policy, then you can expect to pay about $1,441 after filing a claim.

Increases, however, vary by state. In California, premiums increase by about 63%. In Maryland, though, premiums tend to go up by 22% on average.

Regardless of where you live, your insurance premiums will increase.

There is one exception to this rule. A handful of insurance companies will waive increased premiums as long as you haven’t filed a claim in several years. Not all policies carry this guarantee, so you should read your policy’s fine print before you decide to file a claim.

File a Claim When Your Car Has Major Damage

You’ll need to do a little math to determine whether you should file an insurance claim after an accident causes major damage to your vehicle. Start by looking up your current insurance premium. Multiply that by the average price increase for your state. Then, add your deductible. A Maryland resident paying $1,000 a year for a policy with a $500 deductible would get a total of $1,941.

Consider, though, that the price increase will last a few years. In reality, your premium will increase by about $1,300 over the next three years.

If the repairs cost more than $1,800, then you should absolutely file an insurance claim.

More often than not, filing an insurance claim makes sense when you need to replace your vehicle’s:

  • Cylinders
  • Hybrid or EV battery
  • Transmission
  • Suspension
  • Camshaft

These repairs typically cost $3,000 or more. Replacing engine cylinders can cost $10,000 or more. If your car’s engine gets damaged during the accident, you don’t even need to think about whether you should file a claim. Just start the claims process as soon as possible so you can get your car repaired.

File an Insurance Claim When Someone Gets Injured

If someone gets injured during an accident, then you probably need to file a claim to avoid the high cost of medical treatment. Unfortunately, hospitals don’t offer transparent pricing, so you won’t know how much a diagnosis and treatment will cost until after the patient leaves the hospital. For example, an x-ray can cost anywhere from $100 to $1,000.

When someone gets injured, you never know how much the medical services will cost. The bill grows quickly, though. Just one night in the hospital can easily cost more than $10,000.

Since you don’t want to pay for someone’s medical expenses, it makes sense to file an insurance claim. Even if your premium increases next year, you will probably save money by having the insurance company pay the hospital bills.

Luckily, almost all states require drivers to carry injury liability insurance. The amount of minimum coverage that you must carry depends on where you live. Florida only requires $10,000 in personal injury protection. Maine requires drivers to carry at least $50,000 of bodily injury insurance.

Buy as much injury liability insurance as you can afford. If your insurance policy doesn’t cover the entire cost of medical treatment, then you could end up spending a lot of money out of pocket.

Talk to Your Insurance Company Before Filing a Claim

You face a lot of uncertainties when you file an insurance claim. You may know how much the average driver’s premium will increase, but you don’t know how much your policy’s premium will go up. Similarly, you don’t know how much it costs to repair your vehicle until you get a quote from a mechanic approved by the insurance company.

Eliminate as much ambiguity as possible by contacting your insurance company and asking them direct questions about your policy.

You don’t have to wait until next year to find out how filing a claim will affect your premium. You can ask your insurance agent to tell you how much the premium will increase. You may discover that the insurance company plans to raise your rate by a significant amount that you don’t want to pay. Then again, you could find that the company doesn’t plan to raise your rate because you have a long history of safe driving.

Some insurance companies will avoid giving you precise answers. If they won’t get specific, remind them that you have plenty of other insurance options. The agent’s attitude may change quickly.

You should weight the pros and cons before filing a car insurance claim. As a general rule, you should pay out of pocket if the repairs cost less than the amount your premium will increase.