Insurance Claim vs. Paying Out-of-Pocket
When to Submit a Claim
We often recommend paying a claim out-of-pocket, but only if the claim is for property damage only. If there is any bodily injury involved in the claim or anyone is even hinting at bodily injury, please call your insurance carrier and turn it in right away.
When Do I Pay Out-of-Pocket?
If no one is hurt and the damage is minor, we always recommend trying to pay any incident under $2500 out-of-pocket (if you can) and not beginning a claim with your insurance carrier. This keeps the claim off of your record. This will help, because the frequency of accidents has an impact on your insurance rates. So, if you have multiple accidents, even if one of them was minor, your rate could go up 50%. Whereas if you can keep the minor accident off of your claims record and you only have one bad accident, the rate will usually only go up 20-30%.
What Do I Do in These Situations?
If you’re insured with an agency like ours, first call your insurance agent and have a conversation before you turn in a claim. Some insurance carriers have specific departments to help walk you through the process to determine whether or not to turn in a claim. Also get estimates! Before you call your insurance company, if you think the damage is minimal, get an estimate from your local body shop for the repair costs.
If you decide to pay out-of-pocket, keep in mind that you will be responsible for providing another car for them to drive while their car is in the shop.
Get it in Writing
You should also have them sign an agreement. Someone can come back on your insurance policy for up to two years after the incident and file a claim. We recommend having them sign something saying they are absolving you from all damages from the accident on XX/XX/XXXX date. It should also list the amount you have paid and state that they have agreed on it. We recommend that you have your attorney draw something up, and it’s not a bad idea to have it notarized. This way if something comes up down the road, you can present the signed document to the insurance carrier to show that you’ve already paid $XXX and that everyone agreed upon this amount.
Paying Out-of-Pocket After Submitting a Claim
People often decide to pay out of pocket after they have turned in a claim to the insurance company. A good example of this situation is when a teenager has a fender bender. The parents might call the insurance company directly and start the claims process, but then decide to pay for the small repair costs out-of-pocket. They inform the insurance company of the change, but unfortunately the insurance company already knows a claim has occurred. Even if the insurance company doesn’t pay anything out, they will still penalize you for having an at-fault accident.
Summary
Even if the insurance company doesn’t pay a claim, it will still go against your insurance. So, once a claim has been started, you might as well let them take it from there.