Has this happened to you? You’re in bumper-to-bumper traffic on the highway, and with all the stopping and starting, you end up in a fender-bender. You pull over, survey the damage, and notice a small dent in your vehicle.

Now, it’s time to exchange insurance information, file a claim, and kick off the process to get your damage paid for by an insurer.

Or is it?

In some cases, it may not be necessary or productive to file an insurance claim. In this short guide, we’ll give you our best tips on when and when not to file an insurance claim.

Understanding Your Coverage

The first step to choosing whether or not to file a claim is understanding what your insurance actually covers.

All fifty states require that drivers take out auto insurance. However, specific requirements vary.

For example:

  • Florida requires that drivers take out insurance to cover property damage liability (damage to another person’s vehicle in an at-fault accident), and personal injury protection (PIP) to cover your own injuries. It doesn’t require that you take out insurance to cover another driver’s bodily injury as it’s assumed their PIP insurance would cover it.

  • In contrast, Idaho requires that you take out bodily injury insurance and property damage liability to cover the other driver and their passengers. It does not require that you take out PIP.

None of the 50 states require collision coverage, which covers damage to your vehicle in an accident where you’re at fault or are hit by an uninsured driver.

Beyond understanding your insurance coverage, it’s also important to familiarize yourself with your deductible. That way, you can more thoroughly grasp the kinds of claims your insurance could actually cover.

Auto Insurance 101

What’s your coverage limit? What’s your deductible? You might not know the answers off-hand—especially if it’s been a while since your insurance representative explained your policy. If you need a refresher on this information, read on.

  • Your policy has coverage limits in each category you selected. For example, if you have $10,000 in property damage liability insurance, that means your insurer could potentially cover property damage claims up to $10,000.

  • However, that doesn’t mean they’ll cut a $10,000 check right after an accident. First, you’ll have to pay a deductible. That’s the amount you’re required to pay out-of-pocket before your insurance kicks in. Is your deductible $1,000? If you do $10,000 of damage to another driver’s vehicle, you would have to pay $1,000 of that money yourself before your insurer kicks in the other $9,000.

How Your Insurance Rate Is Calculated

Now that you have a better understanding of deductibles, your first instinct might be to change your insurance policy to get the lowest deductibles possible. But before you do, keep in mind that this can raise your insurance premium.

In short, selecting a bigger deductible means that you’re willing to take on more financial risk. A smaller deductible means more risk for your insurer, which comes at a premium. To pay less for monthly insurance, select a higher deductible.

There are many other factors that affect your insurance rate:

  • Age

  • ZIP code

  • Whether you own a home

  • Credit score

And, most importantly for the purposes of this article, there’s claim history.

  • At-fault accidents can raise your insurance rate by up to 10%

  • Accidents where you’re not at fault may not raise your rate

Since some kinds of claims can raise your rates. That’s why it can be tempting not to file claims if it’s not absolutely necessary.

The good news? In some cases, it really isn’t necessary to file that claim.

When You Don’t Need to File a Claim

Your insurance is designed to protect you from costly payments when a collision results in damaged property or bodily injury.

One reason why you may not need to file a claim? Because no one was injured and no property was damaged. If you’re in an accident and the two vehicles’ respective bumpers did their job, leaving both cars scratch-free, you can put the matter to rest and get on with your day.

Beyond accidents that do not result in damage, there are some cases in which your insurance just wouldn’t kick in. Therefore, it wouldn't make sense to file a claim.

For example, if you don’t carry a certain kind of insurance, your insurer simply won’t cover it:

  • You could hit your own mailbox driving out of the driveway. If you don’t have collision insurance, there’s nothing your insurer can do to help you cover the cost of repairs to your car—or to your mailbox. Why alert them to an accident where you’re technically at fault, since it could potentially raise your premiums?

  • Have you ever wondered, does my auto insurance cover rental cars? If you get in an accident and your primary policy doesn’t include rental car insurance, there’s no point in telling your primary insurer. Hopefully, you took out a policy with the rental agency or have coverage through your credit card.

The basic rule of thumb here? If there’s zero chance that your insurer can help you out with the damage you’ve caused to the vehicle you’re driving, you probably don’t need to file a claim.

The Gray Area: Filing Claims Under the Deductible

In addition to the claims your insurer just won’t cover, there are also claims that you’d likely have to pay out of pocket because they’re under the amount of your deductible.

Let’s imagine two scenarios where you have collision coverage, property damage liability, and a $1,000 deductible.

  1. If you hit your own garage door, there may be minor damage to the car. However, if the cost of the repair would definitely be less than $1,000, it may not make sense to file a claim with your insurer.

  2. If someone hits you and causes minor damage, they could offer to pay for the total cost of repair out-of-pocket. You could agree not to file a claim. That way, you’d get your car repaired without the accident in your history. However, it’s always wise to take down their insurance information anyway just in case they back out of the deal.

However, the second situation might seem a little bit more complicated. You don’t have much to lose by filing a claim if you weren’t at fault. And filing a claim improves the chances that you’ll have enough cash to cover the cost of repair if it’s more expensive than you anticipate.

In fact, the only leverage you have to make the other driver pay up is that they have much more to lose than you do. The at-fault driver could see a hike in their rates if they report the accident, and failure to report it could have even worse consequences for them if you ultimately choose to file a claim.

When You Definitely Need to File a Claim

If you know you’re at fault in an accident, it can be incredibly tempting to make an offer to cover the other driver’s cost.

Unfortunately, this is a situation where you need to file an insurance claim, even if you think the damage will be under your deductible.

Let us explain.

  • Did you read the fine print of your insurance policy? If not, you may be surprised to know that your insurance has several conditions that you must meet for your coverage to remain valid. One of the most common conditions is promptly notifying your insurer of an incident that could result in a claim.

  • If you’re tempted to pay out-of-pocket, keep in mind that the other party’s costs could go up. They ask you for $1,000 to cover a dented bumper now, and then contact you a week later because they say you caused a scratch, too!

  • If you eventually file a claim significantly after the date of an event, or after paying partially for another driver’s repairs, it could void your policy entirely, since you didn't meet its terms.

Essentially, if an accident has caused damage to another driver’s car or resulted in any injuries, you need to let your insurer know right away.\ \ After all, medical issues after an accident can turn out to be more serious than they initially appear, as can damage to a car’s engine and interior.

Keep in mind that you may not actually be at fault. Your insurer doesn’t just provide money to an injured party—they conduct their own investigation of events. They may find that traffic law, insufficient insurance, or another issue lay the blame at the other party’s hands.

If you are at fault, your premium may go up. However, this increased payment is much less than the cost of voiding your policy and getting sued by another party.

Claim The Right Car Insurance With OAI

As you can see, adequate car insurance can help you out of sticky situations. From helping cover damage you did to your own vehicle to making sure another driver won’t sue you after an accident, insurance is key!

Are you looking for an affordable policy to cover your insurance needs?

Online Auto Insurance generates dozens of quotes in one place. Use our online search tool or call a representative to find out which insurer can provide the best rate for your unique demographic profile and insurance needs.

Sources:

Forbes. Car Accident? Not All Kinds Will Make Your Insurance Go Up. https://www.forbes.com/advisor/car-insurance/car-accident-no-rate-increase/

Florida Highway Safety. Florida Insurance Requirements. https://www.flhsmv.gov/insurance/

DMV. Car Insurance in Idaho. https://www.dmv.org/id-idaho/car-insurance.php