When Not to File an Auto Insurance Claim

The situation is all too familiar. Maybe you nicked another car while parallel parking or backed into the cement wall of a parking garage. Maybe you were even involved in a more serious fender bender and the other driver suggests settling the damages with a cash payment. If this is your first time in an accident, you may be unsure of what to do next. In all of these scenarios, you may be wondering if you should file a claim with your auto insurance provider. You may worry that making a claim will raise your premiums or make the situation more complex.

First of all, take a breath; accidents happen. The most important thing is making sure that you, your passengers, and any other drivers involved are safe. Once you have resolved any immediate concerns at the scene of the accident, you can begin deciding whether or not to file an auto insurance claim. Insurance companies recommend that you report any incident in order to fully protect yourself, and this is advice worth following if damages are severe or if another driver is involved — this will protect you if later injuries develop or another party decides to seek damages or sue you.

However, there are some instances when filing a claim may not be necessary. Below, we walk through some of the most common scenarios that determine whether you’re better off filing an insurance claim versus paying out of pocket.

You Should File an Auto Insurance Claim If…

There are injuries (even minor ones)

In many states, called no-fault states, your insurance will pay for medical expenses for you and your passengers, no matter who is at fault. And if you are at fault in an accident, your liability coverage will pay for medical expenses for the other driver. Because medical bills can rack up quickly — and seemingly minor injuries may get worse over time — it’s always wise to report the incident to your insurer so your coverage kicks in. You don’t want to be on the hook for thousands of dollars in unexpected bills; your insurance is designed to protect you against possible lawsuits from injured drivers.

When another driver is involved

Filing a claim with your insurer is recommended anytime a collision involves another driver. This is particularly important when it’s not clear who is it fault; emotions often run high at the scene of an accident, which is why it’s the job of your insurance company and the police to determine who is on the hook for damages. Even if you and the other driver make a deal to settle the cost of the damages in cash, the other driver may claim more damage or demand a higher payment after the fact. Documenting the incident with your insurer helps assign blame fairly and protects you from excessive liability.

There are heavy damages to vehicles or property

The purpose of insurance is to cover expenses due to damages so you don’t have to pay a lot of money at one time. Filing a claim if you’re at fault for heavy damages to someone else’s property is a no-brainer, but it makes sense to file a claim even if you cause heavy damage to your own property. After all, that’s why you pay monthly premiums — so you don’t have to pay thousands of dollars out of pocket if your vehicle needs a trip to the repair shop.

You Shouldn’t File an Auto Insurance Claim If…

You are the only person involved

If you back into a post and put a dent in your bumper, there is likely no need to file a claim, as there is no threat of further damages or medical costs. Liability insurance, which is required by law in most states, won’t cover damage you cause to your own vehicle. It is designed to fix damage to other vehicles when you are at fault. Collision coverage is an optional form of insurance that covers damage to your own vehicle from striking another vehicle or an object, but if you don’t have collision coverage on your policy, you’ll have to pay for damages yourself anyway.

There is only a small amount of damage

Even if you do have collision coverage on your auto insurance policy, you may still choose to forego the process of making a claim if the damage to your own vehicle is negligible. If your deductible is higher than the cost of the repair, you’ll have to pay out of pocket anyway, and you run the additional risk of raising your monthly premium. Say you scrape the side of your car while squeezing into a parking garage stall; if you have a $500 deductible and your repairs will only cost $450, you’ll be on the hook for the entire payment, and any claim you make will stay on your record for file a claim.

Will My Auto Insurance Premiums Increase After a Claim?

Maybe. It depends on several factors, including your claim history, driving record, and policy. If this is your first claim and you have accident forgiveness, you may not see an increase. On the other hand, you could get hit hard. A 2020 study from Coverage found that the average premium increase in the U.S. for someone with full coverage is 34%.

Here are some additional factors that may lead to a premium increase if you file a claim:

• If you are at fault. If you are found to be at fault for the incident, your rates may go up, as you are more of a claim risk in the insurer’s eyes.
• If the claim involves extensive damage or high medical costs. If you cost the insurance company a lot, it will try to recoup those costs through a rate increase.
• If you have multiple claims in a short period of time. Much like filing a high-cost claim, filing many claims may cause an increase, as the company sees you as more of a risk in the future. Your claims history, or personal insurance report card, follows you for at least three years, even if you change insurance companies.
• If you live in a no-fault state. No-fault states require insurance companies to pay for the insured’s and their passengers’ medical costs. Since even an incident that is not your fault can cost the insurance company money, it is more likely to raise your rates if you file a claim.

Driving uninsured may sound like a good way to get around an increased premium, but it isn’t worth it in the end — the costs if you get caught or cause an accident could top $5,000. If your monthly rates have exceeded an amount you’re comfortable paying, it may be time to get quotes from other companies to see how your current provider compares. Quotes are based on personal factors like age, driving history, and address, and every company weighs these factors a little differently.

What’s Next?

• Check your current coverage and deductibles and make sure you are in compliance with your state’s minimum coverage.
• If you haven’t shopped for new insurance lately, compare rates from a few different companies to make sure you’re getting the lowest price.
• For more information on buying auto insurance, see our car insurance buyer’s guide.