Car insurance: Should I file a claim?

We get a lot of inquiries about car insurance: Should I file a claim? Is it worth it? Will it cause my premiums to go up? Will I get my policy cancelled? Will it go on my record?

Here’s what you need to know before you decide not to file a claims:

When you absolutely should file a claim

First of all, let’s get something out of the way right off the bat: Always file a claim if there are injuries or if someone is potentially injured in the accident.

Sometimes back and neck injuries take a while to become fully apparent. What may seem like a non issue a day after a collision can become a significant medical issue involving time off work, back surgery, and tens or even hundreds of thousands of dollars in medical costs.

Filing a claim right away gets the incident on record. So there’s money available for the injured party to be compensated for medical treatment, missed work, and other damages.

If there’s no claim filed, you give the insurance company some wiggle room to deny the claim. They could argue that the accident didn’t have anything to do with the injury, or was only partially contributory to the injured party’s medical condition.

If you’re the injured party, you could be stuck with significant medical bills and no money to help you pay for them. Or you might have to delay or forgo needed medical treatment because you can’t afford it.

If you’re not the injured party, they could potentially sue you for damages not covered by insurance. Ultimately, and depending on state law, they could get a judgment, and then garnish your wages and seize your assets to satisfy the judgments.

Incidentally, this is why state minimum liability coverage is never enough to protect you. Always try to add enough liability coverage to protect not only people around you, but to protect yourself against financial ruin if you are in an accident and someone is injured as a result.

Unless you’ve got a half million or more just sitting in the bank and you don’t care whether you lose it or not, protect yourself and any injured parties by going through the claims process. It’s what it’s for. You’ll at least be protected up to the limit of your policy.

Don’t Fear Filing a Claim. 

Now, usually, the rate increase isn’t crippling. Some people are afraid that their carrier will cancel them on the spot. That doesn’t happen either, unless there were drugs or alcohol involved or you were driving insanely recklessly.

The fact is premium increases after a single minor incident with no evidence of alcohol or drug use probably aren’t going to cause your premium to increase by all that much on its own. Insurance companies look for patterns: Multiple accidents, and multiple claims. If you’re a serial claims filer, then you could see some major premium increases or even cancellations.

Typically, the carrier will spread the size of your claim over about five years, and build that expected future claims mount into your premium.

Claims That Don’t Count. (Mostly.)

Some claims don’t count against you, or are weighted very lightly by insurance carriers.

• Comprehensive claims (Floods, fires, theft, vandalism, hailstorms, tree limb damage, break-ins, etc.)
• Towing/roadside assistance
• Glass claims.

An occasional legit claim in these categories usually doesn’t hurt you. It won’t get your policy cancelled, and it won’t cause a significant claim increase, and very likely none at all.

Insurance companies know these kinds of claims can happen to anyone, regardless of their driving habits. A single incident or two isn’t predictive or indicative of an underlying driving issue like incompetence, alcoholism, or reckless disregard for the safety of others on the road.

However, a long pattern of these types of claims can cause carriers to take notice.

But if it’s just a one off, and you need the money, you should probably file your claim with your insurance company. It’s what it’s for.

When to Skip Filing a Car Insurance Claim

Now, if there are no injuries or potential injuries, and the claim isn’t large, you might want to skip filing a claim. The reason: A recent auto accident usually causes your insurance premium to go up.

So when might you skip filing a claim? Here are several scenarios where it might be worth it not to file:

1.) If only your vehicle is involved and you can easily and safely keep driving your car. You can just live with the dents and dings in your car. You’ll have some depreciation costs, depending on the damage. Your car won’t be worth as much at resale. But if you’re planning on driving your car until the wheels fall off anyway, that might not be a big concern.

2.) The cost to repair is less than your deductible. In these cases, filing the claim results in no benefit to you (unless you have another accident within the same policy year, in which case the first claim counts toward your deductible). But it could result in the insurance company increasing your premiums.

Often it’s best to just pay the cost out of pocket (which you’d wind up doing anyway), and get on with life. Save your car insurance for more major claims.

If this seems like a reasonable and realistic course of action to you, you might think about increasing your car insurance deductible. If you can afford to make small repairs out of pocket, no problem, it doesn’t make sense to pay for a lower-deductible policy that you probably wouldn’t use anyway for smaller claims.

If you can afford the risk, then take advantage of the savings in premiums now. Increase your deductible, and bank the savings. For individual consumers driving personal vehicles, every dollar in premium you save by increasing your deductible is tax-free money!

Yes, Help Me Save Money Every Month by Increasing My Deductible! 

3. If you’re driving a beater anyway. If the damage is cosmetic, and you’re not worried about cosmetic issues – you just want your car to run and get you places safely, you can take your lumps and move on.

4. The accident was your fault and you live in a “tort” state. A “tort state” is any state that isn’t a “no-fault state.” In tort states, car insurance companies try to identify which driver was at fault in an accident. Ideally, only the at fault driver will have his or her premiums increased (though it’s possible to be found partially at fault). If you file a claim and you’re at fault, you’ll take the brunt of the insurance premium increase. The other driver probably won’t.

So you have more to lose by filing a claim than the other driver.

In contrast, if you live in a “no fault” state, the insurance carrier will likely increase your future insurance premiums, even if you’re not at fault at all.

5. The accident wasn’t your fault but you live in a no-fault state. As we mentioned, if you live in a no-fault state, an accident can cause you to face a car insurance premium increase even if the accident wasn’t your fault at all. 

So what states are no-fault states? 

Here are the no-fault jurisdictions as of January 2023:

Additionally, Kentucky, New Jersey, and Pennsylvania are “optional no-fault” states. In these states, you can choose ahead of time whether to drive under an “no-fault” standard.

And if you don’t see your state listed here, you’re in a tort state!

Warning – Don’t Settle Privately With Other Drivers

Don’t settle privately with the other driver just to keep it off the record. Doing so may leave you open to liability and future claims. For example, the other driver could claim you never paid them. Or they could claim injuries that weren’t apparent at the time of the wreck, and they weren’t covered under the terms of your private settlement – which were probably oral, anwyay.

It’s also very easy to effectively admit fault. Which depending on the state could leave you open to lawsuits not just by the other driver, but potentially by the other driver’s insurance company, as well. 

Consult an Attorney.

You should always consult with an attorney or car insurance professional before deciding not to file a claim. This blog is for general informational purposes only. There’s no way I can anticipate everything about your individual situation sight unseen. Work with your attorney, or contact your agent, me, or another car insurance professional for informations specific to your situation.

Speaking of contacting an agent….

Contact Us! 

It’s a great idea to speak with an experience car insurance professional with an independent brokerage (not captive to one single carrier) every six months to a year. An agent with an independent agency can help you compare rates and coverage among many different competing insurance companies. So you can be confident you’re getting the best possible price for your situation.

It’s also a good idea to take a look at your deductible every so often, and increase it if you can afford to. That way, you save your insurance policy for what it does best: Large, infrequent claims. You can save substantial amounts of money every year if you can afford to increase your deductible. Even increasing your deductible from $500 to $750 or $1000 can make a meaningful difference. It almost always pays for itself in a short period of time.

Act Now!

The best time to act is now. Click here to contact us. Fill out the online inquiry form, and our agents will get to work for you finding quotes from the best carriers doing business in your state.

And it’s always free!

Thanks for reading, and I’ll see you on the road!

Steve “Mr. Insurance” Ludwig
CEO, Select Insurance Group

For Further Reading

Does Car Insurance Cover Break-Ins? 

How Car Insurance Surcharges Could Increase Your Costs in 2023

What Is PIP Insurance?