Being in an accident can be scary. Fortunately, your auto insurance can help cover your financial responsibilities. But if the accident doesn’t result in major damage or injury, you might ask, “Should I call my insurance company after a minor accident?” “
The short answer is yes – it’s always a good idea to let your insurance company know when you’ve been involved in a collision. However, you can choose to pay for the repairs out of pocket, depending on the circumstances.
When might someone consider paying out of pocket
Paying out of pocket for a car accident always carries a certain level of risk. That being said, the use of insurance is not always required. Not using insurance to cover an accident means your premium shouldn’t go up due to a loss, which is a big plus. Here are some types of accidents for which the use of your auto insurance may not be necessary:
An inexpensive accident with just you or your car
If you are in a very minor collision that does not involve any other driver, you can probably get away with paying the damages out of pocket. An example would be hitting an object and getting a dent in your bumper or a crack in your windshield, but there is no other person injured or significant damage done. In this case, your insurance policy deductible might be higher than the cost of repairs, so filing a claim would not be financially beneficial.
Very minor accident with another driver
The other situation in which it might be wise to pay out of pocket for damage caused by an accident is a very minor collision with another driver. A classic example is getting stuck at a stop sign or bumping into another car in a parking lot. Assuming the damage is minimal and both drivers agree on who is at fault, it might be a good idea not to purchase insurance.
However, insurance professionals usually only advise avoiding insurance in this situation if you can be sure that the other driver will not file a claim without your knowledge. If you feel any hesitation, it may be worth contacting your insurance company to avoid unpleasant surprises down the line.
When to contact your insurance company
Auto insurance is designed to protect your finances in the event of an accident, whether you cause a collision or get hit by another driver. While you can get by without contacting your insurance company after some accidents, more often than not you will need to let them know. Here are some situations in which you should contact your insurance company:
Someone got hurt
If you or the other driver involved in a collision is injured, you should contact your insurance company. The liability portion of your policy will cover all injuries unless you live in a no-fault state, in which case Personal Injury Protection (PIP) coverage will usually come into effect. Medical bills after an accident can be costly, even if the injuries are minor. Using your insurance could save you a lot of money that would otherwise be out of your pocket.
You don’t trust the other driver
If you have an accident and you don’t trust the other driver’s story, be sure to report the accident to your insurance company. For example, if you and the other driver cannot agree on the perpetrator of the accident or if you suspect that the driver may fake an injury to get more money from your insurance company in the future.
The costs will be expensive
If you have an accident with significant damage that will likely result in expensive repairs, let your insurance company know. Your Property Damage Liability (PDL) should cover repairs to the other driver’s vehicle if you are at fault. Likewise, if you are involved in a collision where another driver is at fault, their PDL should step in to cover damage to your vehicle. If you have full coverage, using insurance means you won’t have to cover the full cost of repairs out of pocket in a covered accident, regardless of fault.
Things to consider before paying for an accident out of pocket
If you decide to pay for an accident out of pocket, there are a few things to consider first. Even if a collision is minor and there are no injuries, it doesn’t automatically mean that avoiding insurance is the right decision. Here are some things to think about:
Make sure the damage estimate is correct
First, make sure the estimated repair cost for any damage is correct. Don’t rely on a quick search on a search engine to see what a certain repair might cost. Instead, go to a local body shop and have a mechanic give you a quote after examining the vehicle in person. The damage estimate may be considerably higher than expected and you may not be able to file a claim if you wait too long after the incident. There might be internal damage that you cannot physically see, which could lead to greater costs.
Make sure you trust the other person
Before you decide to pay for an accident out of pocket, it’s important to make sure you trust the other driver involved. You can both decide to cover the collision out of pocket, but there’s no guarantee that the other driver won’t file a claim behind your back later. If you have any doubts, it’s a good idea to contact your insurance company for peace of mind.
You could have accident forgiveness
Some drivers have accident forgiveness included in their auto insurance policy. With Accident Discount, your rate will not increase after your first covered accident, assuming it is not a Major Accident. If you are on a first accident pardon, you may decide to contact your insurance company and file a claim, as this should not impact your premium.
Paying out of pocket could offer greater financial flexibility
If money is tight, paying out of pocket after an accident may make more sense. This allows you to pay on your own schedule, which means you could avoid paying a large amount all at once. You can also get multiple repair quotes from different stores, while some insurance companies won’t let you choose the mechanic.
If you get a new quote, you may have to report the accident
When you get a car insurance quote, you are usually asked to disclose any recent accidents or traffic violations that you have had. This includes incidents that were not covered by insurance. If you get a new auto insurance quote, your failure to disclose recent accidents could compromise your ability to obtain coverage.
The exchange of information is important after any accident
Even in the event of a minor accident, it is a good idea to exchange information with the other driver and collect evidence of the collision. If the other driver decides to sue you in the future, having photographic evidence of the damage could help you avoid an unnecessary legal battle.
Frequently Asked Questions
Does insurance increase if you pay out of pocket for damages?
No, your insurance premium shouldn’t go up if you decide to pay damages out of pocket. However, if the other driver decides to file a claim without your knowledge, your insurance rate could increase.
Will my insurance company know if I have an accident?
Insurance companies can determine your accident history by looking at your driving record. Unless you file a claim with your insurance company or the police are called to the scene of the accident, it is unlikely that your insurance company will discover a collision that you do not report.
How much do auto repairs generally cost?
In 2019, the average cost of a car accident with property damage only was $ 4,600, according to the National Security Council (NSC). However, the actual cost of repairs will depend on the severity of the damage, the type of vehicle and where you live.
How can I lower my rate if it increases after an accident?
If your auto insurance rate goes up after an accident, there are some things you can do to save money. Look for discounts you can take advantage of, consider increasing your deductible, working on improving your credit score (if your state includes it as a rating factor), or consider switching providers.