Nothing says “rude awakening” like trudging out to your car in the morning to find the passenger window smashed and the interior ransacked.
You don’t keep anything valuable in your vehicle, but the damage to your window is real. And the burglar put some serious dents in the door. You’re easily looking at a $1,000 repair bill.
Should you eat the cost yourself or file a car insurance claim? That depends on what your auto insurance policy covers, the size of your deductible, and how the claim might affect your car insurance rates moving forward.
Should You File an Auto Insurance Claim?
Filing an auto insurance claim is not as easy as pushing a button. Before you begin the process, know what you’re getting yourself into.
Pros & Cons of Filing an Auto Insurance Claim
Auto insurance claims have upsides and downsides. On the plus side, a claim helps you reduce or eliminate out-of-pocket repair costs and costly liability lawsuits. On the other hand, filing a claim can raise your premiums and might be more trouble than it’s worth.
Pros of Filing a Car Insurance Claim
Filing a car insurance claim can have clear financial benefits — if your insurance company approves the claim.
- It Helps You Pay for Repairs. A successful car insurance claim reduces or eliminates your out-of-pocket car repair costs. Considering that car repair bills can cost several thousand dollars after a serious accident, that’s no small thing.
- It Protects You From Lawsuits. If you’re involved in a car accident that injures another person, they may be entitled to sue you for medical bills and other damages. If successful, this suit could cost you far more than repairing or even replacing your own vehicle. Your auto insurance policy can pick up some or all of these expenses, but only if you file a claim.
- It Could Get You Into a Newer Car. If it’s going to cost more to repair your vehicle than replace it, it’s considered a total loss. Depending on the terms of your policy, you may be entitled to a payout worth more than the car’s fair market value. You can use this reimbursement to buy a nicer, newer car than the one you lost.
Cons of Filing a Car Insurance Claim
Many car insurance claims are worth filing, but do understand the drawbacks before moving forward. Otherwise, you might be surprised by nagging out-of-pocket expenses or higher insurance premiums.
- It Might Raise Your Rates. It’s likely, though not guaranteed, your car insurance policy premium will increase after you file a claim. Whether and how much depends on your insurer’s surcharge schedule, which determines how rates change in response to different types of claims. If you have a blemish-free driving record, your auto insurance company might ignore your first claim and hold off on the rate increase.
- You Might Still Have Out-of-Pocket Costs. In most cases, auto insurance claims reduce but don’t eliminate out-of-pocket costs. That’s because most auto insurance policies have deductibles — the portion of the claim the policyholder pays themselves before insurance coverage kicks in. The higher your deductible, the more you’ll pay out of pocket.
- The Claims Process Takes Time. Filing a car insurance claim is easier than it used to be. You can fill out claim forms, upload photos of the damage, and send copies of medical bills to your carrier online or through a mobile app. You might not even have to meet with an insurance adjuster in person. But the process still takes time, especially if the insurer needs more information or denies your claim at first. You have to decide whether a relatively small payout is worth the effort.
When You Should File a Car Insurance Claim
In some situations, filing a car insurance claim really is the best course of action. A claim is more likely to make sense when the stakes are higher, such as in these situations.
1. You Had a Car Accident With Another Driver
In most cases, an accident involving another driver is grounds to file a car insurance claim. That’s true even if the accident doesn’t appear serious at first.
The other driver might notice body damage only after returning home. Or they might decide to seek medical care hours or days later when their nagging neck cramp worsens — ditto for you or your passengers.
When you’re involved in an accident with another driver, the best practice is to call the police and remain at the scene of the accident. Then, do the following:
- Get the other drivers’ contact information, including their phone number.
- If they have it handy, get the other drivers’ insurance information.
- If you have one, contact your insurance agent to let them know that you’re likely to file a claim.
- Answer the responding officer’s questions so they can produce an accident report
- If police don’t respond in person — which is common for minor accidents in some jurisdictions — visit the nearest police station to file a police report as soon as you’re able.
- Keep records of any medical expenses and repair bills as you receive them.
File your claim as soon as you have your repair estimates and medical bills in hand. Most states allow at least two years to file a bodily injury claim and even longer to file a personal property damage claim. But car insurance companies tend to be suspicious of claims filed months or even weeks after an event. The sooner you file, the less likely the company is to deny your claim — and the sooner you’ll get your claim payment.
2. You Were Injured in an Accident Involving Another Driver (or the Other Driver Was Injured)
Even if you think your injuries are minor, filing a car insurance claim ensures you’re protected by your policy’s bodily injury coverage.
That’s particularly important if you don’t have health insurance or have a high-deductible health plan that could leave you on the hook for thousands of dollars in out-of-pocket medical expenses.
Filing an insurance claim after an accident involving another driver reduces the risk you’ll be surprised by a lawsuit down the line. In some states, drivers can sue to recoup medical expenses and other costs associated with an injury and recovery, but your insurance coverage will reduce the financial burden.
3. You Damaged Your Car Yourself & the Repairs Cost More Than Your Deductible
The “nice” thing about a single-car accident is that you don’t have to worry about other drivers’ medical claims. But single-car accidents can still be really costly, even if you walk away from them no worse for the wear.
If your estimated repair costs significantly exceed your policy’s deductible, a car insurance claim could be warranted, even if it results in a higher premium.
But ask your insurer how much your premium is likely to increase after you file and for how long. Five years is typical, but some insurers could cut you a break sooner.
When You Should NOT File a Car Insurance Claim
While filing an insurance claim can be financially useful in cases of major damage or injury, there are times when you’re best off not filing a car insurance claim.
1. You Damaged Your Car Yourself & the Repairs Cost Less Than Your Deductible
Hold off on contacting your car insurance company after a minor accident that doesn’t involve another driver. First, determine the extent of the damage and the likely cost to repair it.
If the repair shop quote comes in lower than your collision or comprehensive deductible, you’re better off not filing. You can choose to cover the expense out of pocket or leave it be. At best, your claim would be a financial wash, and it could cost you more in the long run if your premium increases.
2. The Type of Damage Isn’t Covered by Your Policy
Not all types of vehicle damage are created equal, at least not in the eyes of your insurance company.
One of the easiest ways to reduce your car insurance premiums is to drop comprehensive and collision coverage, which aren’t required by state law. If you have an older car that isn’t worth much, there’s a good chance you’ve already done so.
That’s probably a smart move. Just know that you can’t turn around and file a claim for damage those add-ons would have covered. That includes:
- Comprehensive Coverage. This insurance covers damage caused by animals and objects, including road crashes involving animals and objects falling on or striking the vehicle. It also covers weather-related damage, such as hail damage, as well as theft, vandalism, and sometimes fire damage.
- Collision Coverage. Collision insurance covers crashes involving another vehicle or a stationary object, such as a tree, building, or retaining wall. It also covers single-vehicle rollovers and fall-overs.
Note that if you’re still paying off your car loan, you may be required by the lender to carry these types of insurance.
3. Your Car Isn’t Damaged & the Other Driver Doesn’t Want to Pursue a Claim
If you’re fortunate enough to escape a minor fender bender with no visible damage to your car and no bodily injury to yourself or your passengers, you don’t need to file a claim for your own purposes.
If the other driver or drivers involved in the accident were similarly fortunate, they might not want to file a claim either. Even if they sustained minor vehicle damage, they might not want to take things further because they don’t have valid car insurance. About 1 in 8 U.S. drivers were uninsured in 2019, according to the Insurance Information Institute.
In this case, you can simply walk — or drive — away.
Millions of car accidents happen on American roads each year. Each one represents a potential unexpected expense for the person or persons involved.
Not all cause significant financial distress, however. Very often, car insurance makes the difference. Adequate car insurance coverage can turn a $5,000 repair bill into a far more manageable $500 expense, entirely offset the cost of replacing your totaled vehicle, or even shield you from a lawsuit that might otherwise bankrupt you.
On the other hand, minor fender benders might not warrant the effort it takes to file an auto insurance claim. Filing could even backfire if it produces little upfront financial benefit and years of higher premiums on the back end.
So it pays to know when to file — and when to hold your fire.