So you got in a car accident. The next step is to make a claim on your insurance policy, right? Not so fast! Making a claim isn’t always your best option. Sometimes, you’re better off paying out of pocket.
When should you make a claim? Today, we’re helping you decide whether or not to file a claim after a vehicle accident.
You Have a Responsibility to Report an Accident to the Police and the DMV
First, we need to warn you. In many cases, you’re required to report your accident to the police, the DMV, and your insurance company.
In New York state, for example, you need to make a report to the New York DMV if the property damage for any person involved in the collision is greater than $1,001. In other states, like Oregon, you’re only required to report it if there was more than $2500 in property damage.
In almost all states, you’re required to report the accident to the police and the DMV if someone was injured or killed in the accident, regardless of the severity of the injury.
Some states have other unique conditions as well. In Wisconsin, for example, you must report any accident that causes more than $200 of damage to government property.
Filing a DMV accident report is typically a painless process. In many states, you can print out a form online, then mail it to the DMV. Your local police station might also have the required forms.
You Can File a Report Without Making a Claim
You can file a report to the police and the DMV and even your insurance company without making a claim on your insurance policy.
Don’t be scared of talking to your insurance company – even if you don’t want to make a claim. In many cases, your insurance company will help you decide if it’s worth making a claim on your policy. You can add up the damages, then determine if it’s worth paying your deductible.
Why Wouldn’t You File a Claim?
Basically, there are two types of situations where you wouldn’t want to file a claim:
- You’re making a cash deal with another driver – say, if the other driver is uninsured and wants to keep the collision “off the books” (even if it was a serious accident with lots of damage)
- The cost of repairing the damage is less than the price you’d pay for the deductible
There are pros and cons to each of these situations that we’ll discuss below.
Your Deductible is Higher than the Damages from the Collision
So your deductible is $1,000 and it’s only going to cost $500 to repair your car after a minor fender bender.
In this situation, it’s generally not in your best interests to make a claim on your insurance policy. If the collision was straightforward and led to minimal damage to your vehicle only – and no additional property damage or healthcare bills – then you might want to pay out of pocket.
If you pay out of pocket, you get to maintain a clean insurance record and you save money. If you’re absolutely certain the costs of repairs are less than your deductible, then feel free to pay out of pocket.
You’re Making a Cash Deal With Another Driver
It’s generally not a good idea to make a cash deal with another driver. In these situations, the driver might simply be trying to avoid making a claim. Or, the driver might be trying to intimidate you. The driver might be uninsured or could even have a criminal history.
If you were in a serious collision with another driver, it’s generally in your best interests to make an insurance claim regardless of who’s at fault. Here are some reasons:
- If you don’t make a claim, then you won’t get coverage for things like renting a car. Your car might require repairs and it could be in the shop for days or weeks – but you won’t be reimbursed for a rental car.
- The other driver might claim to offer you a deal, only to approach his insurance company later. This makes you look guilty because you didn’t report the claim.
- Your car insurance company will be unable to help you with any aspect of the repair and rehabilitation process, including any extra repairs that may not immediately be apparent after the accident. Or, you might have health issues that don’t appear for months afterward.
- You might be charged with leaving the scene of an accident. The other driver might report the accident after the fact, leaving you looking guilty.
- Insurance companies often have preferred repair shops that they recommend. If you choose an independent repair shop, then you might not have the same quality service.
- Scam artists and con artists might intentionally get into a minor collision, only to “shake down” drivers for cash. Some people intentionally walk behind a reversing car in a parking lot, for example, then demand cash from frightened drivers. Keep your guard up.
In general, you need to file a police report if there’s more than $1,000 in damage to physical property (like cars) or any injuries to people from a collision. You also need to file a report to the DMV if a certain amount of damages occur (the specific damage requirement varies from state to state, but it’s generally around $1000 to $2500). However, even though you need to file a report, you do not always have to make a claim on your insurance policy.
Some people avoid making a claim on their insurance policy because the cost of repairs is less than the cost of their deductible. That’s okay! You can even talk to your insurance company to see if this is the right option.
Other people avoid making a claim because they want to make a cash deal with the other driver. This generally isn’t a good idea for all of the reasons we explained above.