Paying out of pocket vs. filing a claim

insurance claims adjuster inspects car

Getting into a car accident is always a stressful situation. You’re worried about injuries, damage to your vehicle, and of course, money. How do you know if paying for repairs out of pocket will help you in the long run or make things more complicated? We’ve got you covered. Here are some questions to ask yourself when considering paying out of pocket after a car accident.

Who else was involved in the accident?

Single-vehicle accidents

Car accidents don’t always involve other motorists; lousy weather conditions, distracted driving, or vehicle malfunction can lead to single-vehicle accidents. If you hit an inanimate object and your car is damaged, the first thing you should do is check your deductible. For example, if you back into your mailbox and dent your fender, it may make more sense to pay for the repairs yourself and not file a claim with your insurance company. This is an easy case where paying out of pocket makes sense.

But you may be asking yourself, what harm is there in filing a claim when it was a minor accident that wasn’t necessarily my fault? Well, liability is a tricky thing, and sometimes even when you’re not totally at-fault, an accident can cause your insurance rate to go up.

Multi-car accidents

If you’re in an accident that involves yourself and other drivers, you should always file a claim. Even if the damage to all vehicles involved is minor and the other drivers agree that no one person was responsible, it’s still best to document the accident through a police report and file a claim with your insurance company. You never know if you or one of the other drivers will go home and find more damage to the vehicles than you or they first noticed. If this does happen, your insurer could deny your claim, and you could potentially be sued by one of the other drivers.

How much will the repairs cost, and how much is your deductible?

Do you know how much your deductible is? If you don’t know the amount and are an Elephant customer, you can easily log on to your account to find out. For example, an average deductible is around $500, which means that you would pay up to $500 of the repair costs after an accident before your insurance kicks in to cover the rest. If you’ve been in a single-vehicle accident and discover that the cost to repair your vehicle will be less than your deductible, you’ll have to pay out of pocket completely. In that case, it’d be wise to not file a claim, as it may cause your insurance rate to go up. Again, with single-vehicle accidents, paying out of pocket often makes more sense.

How big is your emergency fund?

Even if the cost of vehicle repairs goes a little over your deductible, paying out of pocket still might be a better move. Why? Because having your insurance rate go up as a result of a claim can lead to a higher cost in the long run. This chart from Quote Wizard shows how your insurance can increase based on the type of accident or incident you’re involved in:

Type of accident or violation Average percent increase after an accident or speeding ticket
One not at-fault accident 3%
One speeding ticket 18%
One speeding ticket with $3,000 in property damage costs 44%
One accident with $3,000 in bodily injury costs 55%
Two accidents with $3,000 in bodily injury costs 81%
Two accidents with $3,000 in bodily injury costs each 95%
Note: Average rate increases are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.

If you have access to an emergency fund, paying out of pocket may be a good idea for car repairs to avoid costly increases to your insurance rate.

Does your insurer have an accident forgiveness policy?

If you’re an Elephant customer, you may have accident forgiveness and not even know it. It’s a policy feature that’s automatically earned after you go three consecutive years without an accident on your policy (by any driver on that policy).

You can also purchase accident forgiveness if you haven’t been an Elephant customer for the past three years but have been accident-free for that amount of time. To learn more, log on to your account or call 1-877-218-7865 to add accident forgiveness to your policy.

If you’re not filing a claim on damage, should you still tell your insurance?

Filling an official claim with your insurer after an accident is different than simply notifying them of an accident. If you’re in a minor accident and you don’t inform your insurance company, you could risk the following consequences:

  • Repaired damage may mask internal issues that cause accidents in the future
  • If prior problems aren’t reported, you might be denied coverage
  • Initial inspection of the severity of the damage and cost to repair to your vehicle may be incorrect

It’s always your best bet to notify your insurance company, even of a minor accident. Your insurance rate will only be affected by filing an official claim, so there’s no fear of paying more.

How long has it been since your last insurance claim or traffic violation?

You may want to decide to file a claim or pay out of pocket for repairs based on how long it’s been since your last accident or violation. Filing too many claims or getting several tickets in a row can boost the cost of your premium. In some cases, your insurance may even choose to drop you as a customer. Learn more about how tickets and violations can affect your premium here.

How to keep your premiums from going up after filing a claim

If you’re an Elephant customer, there are many discounts available to you that could help keep your premium costs low, even after filing a claim. We have many discounts to help lower your premium, including diminishing deductibles. Call and speak to one of our representatives today or log onto your account to find out more about discounts that may be right for you.

Not an Elephant customer? Get a quote today and find out how you can save with Elephant.

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