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Your car insurance provider frequently tells you to report even the most minor car accident.  Contrary to these instructions, sometimes it’s best not to file an insurance claim.

A few years ago, I was in a minor fender bender with another car.  I admit it: the accident was definitely my fault.  But the damage was minor, and I thought I could afford the repairs out of pocket.  I exchanged insurance information with the other driver, but he agreed not to report the incidence to his insurance company.

About a week later, I paid to repair the dent in his driver’s side door.  I didn’t have to deal with an insurance agent, and I guaranteed that my insurance premium wasn’t raised.  My accident represents just one circumstance where it might be smarter, easier, and, in the long term, cheaper not to file a claim.  Let’s first look at why your auto insurance rates could increase due to a car accident.  Then we can try to sort out when not to file a claim.

What might increase your insurance rates?

Filing a claim might get you off the hook for paying for that single incident, but it likely will negatively impact your insurance rates, which can cost you dearly down the road.  Insurance companies use complex calculations to determine the rates you pay.  These are not entirely understood.  But we do know of several actions that are generally known to lead to higher insurance rates or even losing your insurance policy altogether.

If you file too many claims—or even the wrong kind of claim—your premium could go up or coverage might even be dropped.

One claim is unlikely to affect your premium, but multiple claims will almost certainly cost you, particularly if you have other driving infractions on your record.  Consulting with your insurer about whether or not to file a claim can also lead to increased rates.  Though he might seem like a nice fellow on the telephone, your insurance agent is not necessarily a trusty advisor.  Some agents are obligated to report you to the company if you even discuss a potential claim.

A car accident can be an emotionally taxing experience.  In its immediate aftermath, the tendency is to call your insurance company and have them sort out the mess.  Insurance companies try to promote this behavior by specifying that they don’t have to cover your accident if it’s not reported promptly.  Most car policies have this stipulation.

Although filing an insurance claim is often the right decision, it’s important to remember that there is no law that requires you to tell your insurer about a car accident.  As previously noted, any dealing with your insurance company can cost you money—even when you’re not at fault in an accident or don’t intend to file a claim.

When NOT to file a claim

Unfortunately, there’s no easy formula to determine whether or not to file an insurance claim.  The best approach might be to remember what purpose insurance serves—it is meant to provide protection against unaffordable, crippling costs.  That means even if you pay your insurance premiums regularly and on time, you should probably not instantly turn to your insurer following an accident.

  • If you’re in a single-car accident that involves less than $1,000 in damage, you might be better off not filing a claim.  For instance, if you back into a pole and the only damage is to your vehicle, you might want to pay for the repairs yourself and avoid facing possible insurance rate hikes.
  • If you’re at fault in an accident with another car, and the damage is less than $1,000, you might want to try to convince the other driver not to report the incident to his insurer.  It is required by law to exchange insurance information after an accident. But if you could pay for his car repairs out of pocket or even with a credit card, it might save you money in the long run by keeping your premium costs down.  You will want the other driver to get a repair estimate fairly quickly.  Estimating repair costs can be tricky, and you want to be able to file a claim within the designated time period if you underestimated the repair costs.
  • If you’re involved in an accident and the other driver is at fault, you face a trickier situation.  If you trust that the other driver will pay for your auto repairs, you might consider not filing a claim.  Remember, even if you are not at fault in an accident, filing a claim can raise your insurance costs.

When to file a claim

There are some incidents where it might be quite risky not to file a claim.  If the other driver suffered an injury in the accident, you should always file a claim.  Likely, you won’t have a choice in the matter since the other driver will almost definitely insist on telling his insurer.  If you or your passenger suffered an injury, you probably should file a claim as well.  Medical costs associated with car accidents can be unpredictable and can quickly get out of hand.

Filing a claim can result in rate hikes between 20-40%.  To save yourself from years of increased costs after a car accident, be sure to give serious thought to whether filing a claim is the right decision.

Author Bio

Total Articles: 1081
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

patzy says:

I was hit the other day and the person who did the damage did not stay around to ‘fess up’ or leave info, so it was a hit and run and I called my insurance agent and am going to an auto body shop tomorrow that she set up. (yes, I know I can choose who fixes my vehicle, just want to get some general info and compare to other shops).

Your article seems to suggest avoiding insurance claims for the most part. I KNOW the damages will be around 4K which I can’t afford out of pocket and I have a great driving record. Are you suggesting my premiums will go up? On a hit and run?

kevin says:

This statement above is not all necessarily true. I run through Progressive. I was involved in some road debris back in the past. A mud flap hit my bumper at 70. It knocked out my fog light and cracked my bumper. I took it down to a progressive shop and the cost was just under my coverage of 500 to fix everything. The next time I needed to re-up my policy, my premium soared up a bit. I called progressive and asked why, and they found that the reb mistakenly filed my claim under an “At Fault” accident when it should have been No fault comprehensive claim. The saw this because of the write up on the claim. After they fixed it, they dropped my price back down to 595 for 6 months for 2 cars fully covered. Now insurance companies do use FICO scores and your financial situation for determining your premiums. Lets say you have an A or B credit score but you have many debts like cars, house, credit card’s etc and you have never missed a payment. Your debt to income ratio plays a big factor in “THE LIKELYHOOD that you will file”. Basically saying in a nice way that you are already stacked with debt, we don’t trust that you can handle out of pocket expenses because you are already stretched as it is. There are definately wierd calculations that play out in premiums though and it is definately unclear. Now not discrediting the author, this can change from company to company. Reading policy terms, as small and dry as they are, is very important. Just remember that you might find a company offering the lowest rock bottom rate, but look at their reputation on returns to their customers prior to committing to them. Sometimes the naturally high premiums can get you “No questions asked” results with quick cash in hand and great service and little to no bump in premium increase since you are already paying an inherently high premium for quality service.

Dobby says:

I was involved in an accident where I lost control of the vehicle and plumited into a dwelling of a house, I thought it would be best if I didnt claim on the damages and take it into my own hands, but now I realise that I really could use the claim and need financial help with it, it happened 10 months ago though and not exactly sure if its too late. It was 100% my fault and I need some feedback from people, any help???

sierra says:

When I didn’t file a claim for a bump in the parking lot my insurance company usaa found out and threatened to cancel me for not filing. Because i did this usaa refused to insure our new home. I don’t get this advice about not filing a claim. You don’t get a choice.

Lynn says:

Just for someone reading now: Time to find a different insurance company.

David Smith says:

This all underscores why insurance, especially auto, is THE sleaziest business ever invented. If not for the litigious society in which we live, we would not need this BS!

Tina says:

I had a minor incident with a lady.
Last Friday, I stopped at a intersection when the light was red. When the light turned green, I was start driving and saw a lady riding a bicycle. She was coming from left to my car on the intersection. I am not sure she actually hit my car on the left side of my car or she stopped just before the car. She fell with her bicycle. I parked my car, came to her and asked her what happened. She said that was her fault and didn’t know the light turned red. I asked her if she was ok and she said yes
and was just embarrassed. I asked her if she wanted me to take her but she said ok so she went home. I was not feeling well so I called my insurance company, asked a representative if I need to file a claim. The representative said it was up to me. He gave a claim number, said an agent will help me out. Later I realized he file a claim so called my insurance company and told I didn’t want to file a claim but the agent did. My insurance company refuse cancel the claim opened with the representative without my agreement. I think it is not right. What would you like to recommend in this situation? Thank you

Joe says:

Great post!

Jess says:

Totally agree.

TG says:

A tremendous storm occurred while I was in the restaurant and my car was parked. I came out and my friend noticed that paint was off my bumper in 2 places. I reported to the insurance company. I don’t know if branches and debris hit my car or another car. My insurance company filed a incident report and I got as estimate of 500 bucks. I don’t want my insurance to go up! Would I be better to pay it out of pocket. My rates are great now. Some folks have told me my rates will not increase due to no fault, but I don’t trust that. The car is one day old! Also if a claim is never filed, could just reporting it hurt me

Rob Berger says:

I suspect your rates won’t go up. But I’d suggest talking to your insurance agent. They can tell you for sure.

Hrm says:

If you thought you were at fault and decided to pay out of pocket, how can you make sure that the other party wouldn’t really file a claim against your own insurance? Did you ask the other party to sign a Release? Is that a good idea?

Steven says:

I was at fault in an accident in which no one was injured, but the vehicle I rear-ended had a damaged bumper. The driver I hit approached me and asked if I would pay him $1000 for his deductible? I did not feel that he should be out any money because it was my fault so paid the money and signed a document he drafted stating I paid the entire $1000 deductible. The insurance company now wants me to pay $1800, the total amount of the claim after I paid $1000. Am I required to pay again?

Basanta says:

Day before yesterday, While parking my car was hit into a pole where a rod was there which i have not seen and I filed a claim to GEICO which is almost 1500 and out of expense is 300. There is no damage to pole or other nor i have reported to Police . Just wanted to know will this accident will be entered to car fax history , if so my car value will be reduced and this is my first claim and wanted to understand how much insurance rate will increase.

Gene says:

The problem, as I see it is:
1. Auto manufacturers have manufactured cars so that parts absorb more of the impact, reducing injury (this is good, but follow along)
2. Since more parts are potentially damaged in an accident, parts have been highlighted as a key point in profit taking (although still lower cost than injury to insurance companies)
3. Insurance costs have continually raised due to the number of parts and cost of parts required for repair despite their overall lowered cost due to less injury
4. Insurance companies are not interested in controlling YOUR costs, and they cover THEIR cost with increased premium
5. WE end up paying more for both increased costs of parts AND increased insurance costs

Ruby says:

I just wrecked the tailgate of my Cadillac SRX while backing out of my garage. The whole thing needs to be replaced for about $3000 – my deductible is only $500. Now , here’s the other thing… I just totaled another car 2 months ago but I was not at fault. Still an accident though… So, I’m on the fence about filing this claim.

Jane says:

I had a fender bender that was like $1,000 in another state. I gave the other driver my insurance information but planned to discuss with my insurance company whether to file a claim. They filed it and paid it and now I’m being hit because this is my third claim of anytime in the last two years. Does anyone know if I could go to my insurance company and ask to pay them back for that claim, in order to take it off my driving history?

Brad says:

Great article. In my case, I was tricked by my insurance agent into filing a claim. I was at-fault in an accident that cost over $10,000 in repair costs to me. I was not carrying Collision insurance at the time, so I had to pay these expenses out-of-pocket. There were no damages to the other vehicle, a huge SUV. I called my local agent, who told me that I should file a medical claim because “MN is a no-fault state, so you will have personal injury protection regardless of liability. And you don’t have a deductible, so it’s actually cheaper than just going to the doctor and paying your health insurance co-pay.” Not only was she wrong on my deductible – I have one and it’s $100, much more expensive than my health insurance co-pay – but going to the doctor forced an automatic notification process. Now, the doctor’s office will charge me the entire amount of the visit unless I provide a Claim Number, which I can only do by reporting the accident to my insurance company. When I called my insurance company to get a Claim number, they said they have to file a complete liability claim first and it will show I’m at-fault. The rep even said he would reach out to the other party (who had no damage and likely did not report this to their Insurer) to inform them of the Claim and that they had the right to file against me. Does this sound like you should trust your insurance agent? I’d sooner believe a used-car salesman, which is probably what most of these representatives once were.

Dorothy L Miller says:

Recently I started using anew insurance co. The other co wouldn’t renew me since I had a couple accidents within a short time. I own the car but for now have minimum coverage. So when this kid in a pickup backed into my car while parked, I saw he damaged the corner of the rear bumper which would cost around 500 or so. I did not notify insurance or police, got his license and phone no and he agreed to handle it. It’s almost 2 months later and he is objecting to the very fair way I want the car repaired. We’re in CA and he has a NJ plate. Do I have any options available to legally make him do what’s needed?