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If I am in an accident that causes no personal injury, but causes damage to both cars that requires new panels (and has a quotation of $3,000 to fix mine)... how do I decide whether to claim against my insurance?

I've had some people say that I shouldn't claim, just get it fixed out-of-pocket, because my premium will go up much more than what I'll collect from the insurance.

I've had others say that I should claim, because it's possible someone will come back with a personal injury claim some time after the fact.

Suppose my deductible is $1,000 and that the other driver is at fault. I own the car outright, so there is no financing involved.

What should I do? What (financial) reasoning should I apply?

Machavity
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Peter K.
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    Keep in mind that even if you don't file a claim, your insurer may decide to increase your premium if they hear about the accident through other channels (you call them to ask about it, or the other party's insurance tells them, or via police report, etc). – dwizum Sep 03 '19 at 13:39
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    (UK) Somebody hit my wife while she was in a car park. There was no damage or claim but I notified my insurance (she's second driver on my policy) to avoid the other guy making a false claim. 2 years later, I had MY MOTORBIKE insurance go up for that. Insurance companies are a joke. Be careful – algiogia Sep 03 '19 at 16:42
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    @algiogia This unfortunately makes sense, having something like that could simply mean they feel you live in a more dangerous area, or are likely to park in busy high risk areas. Statistically someone who gets hit is more likely to get hit again, even if its just because they live near other drivers who are bad. – Vality Sep 03 '19 at 17:14
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    Maybe it's a dialect thing but "to have an accident" and "to get in an accident" are very different things to me ... – Azor Ahai -him- Sep 03 '19 at 18:51
  • @AzorAhai "To get in an accident" sounds like the accident is something that was already there and is then climbed into... :-) Perhaps I should have said "involved in an accident" ? :-) – Peter K. Sep 03 '19 at 19:00
  • @algiogia Good. That's exactly how it should work. You get into accidents, you pay for it. You drive a motorbike, pay the premium & stop complaining or stop driving at all. – Cloud Sep 04 '19 at 10:43
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    @Cloud I didn't get into any accident, that's the point. Are you an insurer? – algiogia Sep 04 '19 at 11:07
  • @algiogia: How do you know that was the reason for the increase in premium? Did they say so? – cbeleites unhappy with SX Sep 04 '19 at 14:09
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    @cbeleites Yes. When I took out the motorbike policy I didn't tell them of the accident because there was no actual claim. They call me back the next day saying that I failed to inform them of a claim, which confused me because I didn't make any. They then explained that even thought it wasn't my fault and there was no claim, the underwriter was still going to raise the premium. – algiogia Sep 04 '19 at 14:50
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    Some policies (maybe even most) REQUIRE you to notify them of an accident, regardless of whether you intend to file a claim. Failure to do so could result in a premium increase, at the minimum, or even a policy cancellation. – Eric Hauenstein Sep 04 '19 at 17:30
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    @Cloud What?? You are basically saying that if someone hits my wifes car (and she is NOT at fault), the premium for MY car should go up? Why?? – GrumpyCrouton Sep 04 '19 at 19:43
  • @algiogia: wow. I still cannot really understand it (the more so, as you say you did inform them of the incident but there was no claim - how then can they argue that you failed to inform them?) but what I've leaned in this thread makes me think that car insurance over here in Germany may work very differently from what is usual in UK/North America. Part of this may also be due to how the different types of car insurance (3rd party liability, damage to own car) are pooled. – cbeleites unhappy with SX Sep 05 '19 at 06:52
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    @GrumpyCrouton - Yes, that's how it works. Essentially, historical accident rate (independent of fault) is a good predictor of future accident rate, which is a good predictor of their expenses (remember, even if you're not at fault, it may still cost your insurer in terms of legal fees or other ancillary costs). People who get into many accidents may live in a dangerous area, or they may drive much more than average, or some other factor. – dwizum Sep 05 '19 at 14:15
  • @dwizum He was entirely uninvolved with the accident, though? He's not even the one that parked the car, per his comment. Per what he said, he wasn't involved in an accident at all so I'm not sure how much sense your comment makes. – Onyz Sep 05 '19 at 17:35
  • It's not (at all) about his involvement or being at fault. It's about collecting statistics that have some relationship to an individual - enough relationship that there can be a correlation made in an underwriting model. Knowing that someone with whom you share a policy has been involved in a claim is (apparently) enough for that insurer's model to kick the price up. – dwizum Sep 05 '19 at 17:39
  • Consider that another factor for most insurers is your zip code. People take that factor completely for granted, even though it's arguably much less tightly coupled to you as a driver. Insurers collect data about crime and accidents by zip code, and then you pay for what that data tells them about the area you live in even though you may never have been involved in any crime or accidents at all. – dwizum Sep 05 '19 at 17:41
  • @Onyz It's also worth bearing in mind that insurers don't have a crystal ball and can't just divine the true circumstances of an incident. People lying to the insurance company isn't exactly unusual, especially when they're trying to disclaim responsibility. But dwizum's description is the correct guiding idea: it isn't fault that costs insurers money, it's claims (or damages, depending on how you want to think about it), whether the insurer pays out damages or not. – Upper_Case Sep 06 '19 at 19:08

7 Answers7

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To expand on riya’s answer...

When the other driver is at fault, their insurance is the one responsible for covering any claims. You have 3 broad choices at this point:

  1. Pay out of pocket for your repair and skip any claims.
  2. Claim against your insurance, get your repair covered, and let them process the claim against the other person’s insurance.
  3. Submit a claim against the other person’s insurance directly, and hope they come through with the money in a reasonable time frame.

In all three cases, there should be no impact to your premiums, as there was a definite at fault party other than yourself. Personally, I have always gone with option 2 under this scenario. I pay for my insurance company to make sure I am made whole in the event of an accident. Let them deal with the hassle of making sure the other guy pays up.

Marcello Miorelli
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Rozwel
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    "In all three cases, there should be no impact to your premiums" with many companies and states this is not the case and any claim, at fault or not will increase your premium. – Vality Sep 03 '19 at 06:22
  • Did I miss something in the question indicating that Peter was officially determined not at fault (versus just feeling like they didn't cause the accident), and that this did not occur in a no-fault state? – dwizum Sep 03 '19 at 13:38
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    @dwizum: "Suppose my deductible is $1,000 and that the other driver is at fault" – Michael A. Schaffrath Sep 03 '19 at 13:41
  • That sounds more like an (innocent) opinion than a fact, which is why I asked. The other party may well be calling the police and/or their insurance company or lawyer right now, telling them that Peter caused the accident. – dwizum Sep 03 '19 at 13:42
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    Personal anecdote. I worked with someone whose insurance company decided to cancel their (him+wife) coverage for being at fault once and not at fault twice. I think the general guideline is that even if you are not at fault the insurance company assumes that your could have exercised better defensive driving anyways. – MonkeyZeus Sep 03 '19 at 13:43
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    Also a personal anecdote, but my insurance was recently happy to inform me that I had qualified for "Accident Forgiveness" and my rates were going down. The only accident I had ever been in was about 4 years ago, when someone rear ended me while I was stopped at a red light. We happened to have the same insurance company and I was there when he called the insurance company and, multiple times, took complete responsibility for the accident. Apparently my premium's still got dinged (I live in a no-fault state). – conman Sep 03 '19 at 14:23
  • I don't have auto-pay setup so I actually pay my insurance myself and see how much I'm paying. As a result, I would normally notice a change in my premium. I think the reason I didn't notice this time is because the number always fluctuates slightly from year-to-year anyway, and the increase in premiums was low enough that it hid easily in the usual yearly fluctuations. In other words, the increase is not necessarily large. – conman Sep 03 '19 at 14:25
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    @MonkeyZeus It's not really about what they assume about you, it's just statistics. People who have lots of accidents where they are not at fault tend to be more likely to have additional accidents. It could be because they drive more, it could be because they drive more in conditions that make accidents more likely, it could be because they aren't as good at avoiding others. But it's just statistics. Insurance is based around figuring out how likely you are to cost the insurance company money based on experience with people statistically similar to you and charging you based on that. – David Schwartz Sep 03 '19 at 15:06
  • @dwizum "The other driver is at fault" means what it says on the tin: they admitted to the police that they didn't see my (bright yellow) car travelling slowly straight down the road that they were turning onto (and into the driver's side rear panel). – Peter K. Sep 03 '19 at 15:53
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    Thanks for clarifying! I hadn't meant to cause a stir with my comment here, just wanted to ensure that point was clear. I've seen many cases where someone just assumes "well, the other person is at fault, because it's obvious" but then the other party comes back with a lawsuit, or a claim, or whatever. – dwizum Sep 03 '19 at 15:57
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    Thank-you! I did opt for number 2. I just had several people tell me it was the wrong thing to do. Feeling better now, as the actual cost of the repairs was closer to $5000 and the insurance covered it without issue. Will probably give you the check mark, but will wait another day or so before doing so. – Peter K. Sep 03 '19 at 15:57
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    @DavidSchwartz This. I wish people would understand that insurance is not designed to be 'fair'... it's a business model – Cloud Sep 04 '19 at 10:46
  • This answer is wrong and should not be the accepted answer. – Joe S Sep 04 '19 at 13:53
  • I have done 2 and 3 and the past and both worked. What I find is more important than who you file the claim with in an not-at-fault accident is the body shop that you work with. I go with a body shop that is large, dealer-owned, and does plenty of work on expensive cars. They do not cut corners. When my Audi got dinged, the insurance estimated $800 for the repair, the actual cost was $8,000. – Melkkuh Sep 04 '19 at 15:52
  • Note that your insurance agreement may state that you're to inform them of any accidents, at fault or not. You might invalidate part or all of your insurance in not doing so. Check and decide accordingly. – Dan Sep 05 '19 at 10:39
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Disclaimer: this is how such things work out in my experience in Germany. US may be different, but my answer may nevertheless give you some ideas what to ask.

Ask your insurance how to proceed.

(if it's purely the other side's fault, see the other answers: that's nothing to do with your liability insurance)
I'll tackle this part, which is relevant only if you turn out to be at fault after all:

I shouldn't claim, just get it fixed out-of-pocket, because my premium will go up much more than what I'll collect from the insurance.

Here's what I'd do over here:

  • Notify the insurance that there was an accident (over here, insurance conditions require this to be done in a timely manner). No claim submitted so far.
  • Tell your insurance that you're negotiating to take care of the damage directly yourself as it will probably be quite small. That's fine with them.
  • If the claim turns out to be larger, or your negotiations don't get anywhere you can always abort negotiations and tell the other party to submit their claim to your insurance. Tell your insurance as well. As they have been notified already, they'll take care of the claim. And they have a much better position in the negotiations than you have, and are experienced in sorting out what the other pary can actually claim and what not.

  • If they end up paying, you can buy back* the claim from them. If you buy the claim, your damage free time and premium remain unaffected - things are as if there never had been any claim.
    Ask your insurance to calculate what increase in your premium will result (also over the next years) and what the value of the claim was. You can then decide what to do. My insurance tells me that they'll send such buy back offers automatically towards the end of the year.
    Over here, claim-free bonus and buy-back are relevant for the car's 3rd party liability insurance (i.e. you are at fault) and for comprehensive insurance ("your" damage to your car), but e.g. not for partially comprehensive insurance.

    You may describe this procedure roughly as the possibility to opt for a higher deductible on a case-by-case basis.

* I don't now whether this is the correct term in English - the German term (Schadenrrückkauf) literally means buying back the damage.

update: links about this buy-back procedure (sorry, all in German)

Two general explanations with rule-of-thumb numbers:

  • https://kfzversicherungen.org/ratgeber/schadenrueckkauf-schadensfreiheitsklasse-behalten/

    Der Schadenrückkauf ist im Wesentlichen nichts anderes, als den finanziellen Schaden der Versicherungsgesellschaft aus der eigenen Tasche zu ersetzen. Das heißt die Versicherungsgesellschaft geht nach einem Unfall in Vorleistung und Sie haben danach 6 Monate Zeit den Schaden der Versicherung zurückzuzahlen. Falls Sie sich dafür entscheiden „vergisst“ die Versicherung den Vorfall, Sie verbleiben in Ihrer Schadenfreiheitsklasse und zahlen weiterhin weniger Beitrag.

    Here's my own rough translation:

    Buying back the damage [claim] is in general nothing else than reimbursing your insurer for their financial damage out of your own pocket. I.e. after the accident, the insurer advances the money and you then have 6 [I've also heard of 12] months to reimburse them. If you decide to do so, the insurer "forgets" the incident, you keep your no-claims bonus and go on paying lower insurance fees.

  • https://www.finanztip.de/kfz-versicherung/schaden-selbst-bezahlen/
    says that as a rule of thumb, buying back the claim may be cheaper than the increased premiums for claims below roughly 1500 € for 3rd party liability insurance and below 1300 € for comprehensive insurance (Vollkaskoversicherung).

Here's the web page of an insurer including an online calculator that tells you up to which amount you're better off buying that claim: https://www.da-direkt.de/schadenservice/das-ist-zu-tun/schadenrueckkaufrechner

cbeleites unhappy with SX
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    I have never heard of buying back a claim. Can you link to something that documents and explains this concept? – Glenn Willen Sep 03 '19 at 14:25
  • Thank-you! My insurance has been mostly very helpful. Some holidays and vacation got in the way, which meant communication wasn't as timely as it might have been, but generally very good and responsive. – Peter K. Sep 03 '19 at 15:56
  • The thing about this, is if you have your insurance company pay out to you, they will go after the other driver via subrogation. That is, they pay you, and claim rights to claim from the other insurance company. It can take some time to settle the claim, so it could hurt you when your insurance renews, and then reverse itself the next renewal. – Ted Delezene Sep 03 '19 at 19:40
  • @TedDelezene: I think there's a misunderstanding - this buying back stuff is when you are at fault, so your insurance pays out to the other side. Over here, if I have a claim against the other driver/car, my liability insurance isn't involved at all. – cbeleites unhappy with SX Sep 04 '19 at 13:33
  • @GlennWillen: please see my update (unfortunately in German - I didn't find such information in English, but then I'm probably missing the correct technical term for the procedure). – cbeleites unhappy with SX Sep 04 '19 at 14:02
  • I don't think you're missing anything -- I think the reason that you didn't find information in English is that this practice does not exist in the English-speaking world. – Glenn Willen Sep 04 '19 at 15:17
  • @cbeleites not for my understanding of the way it works at least where I work.... (software development, not an agent or anything), but you claim this against your collision insurance, and then your insurance company subrogates that through their insurance company, and if it's not settled before you renew it'd potentially raise your rates until it was settled. And it'd be collission because you weren't at fault.... At least that's my understanding of how it works. – Ted Delezene Sep 04 '19 at 19:21
  • @TedDelezene: aha, that's different over here: we claim against the 3rd party liability insurance of other (at fault) party. I'm not entirely sure whether one would tell one's own Kaskoversicherung (insurance against damage of your car that is noone else's fault) as well: I don't have any experience with that - never had one of those so far. – cbeleites unhappy with SX Sep 04 '19 at 20:07
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if the other driver is at fault, then you should certainly file the claim as there will be no deductible.

riya
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  • Absolutely, though one small note is that maybe the other person will want to avoid the insurance claim and they may just want to pay you directly without insurance getting involved. (depends on the amount of damage and their policy, etc) – Aequitas Sep 04 '19 at 05:37
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    @aequitas yes if the other person wants to avoid the claim, he/she can pay it directly – riya Sep 04 '19 at 18:12
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While Rozwel covered some basics in their answer, there's some other things to consider

Is the liability disputed?

I had a woman hit me (construction zone with poorly delineated lanes) and she claimed I hit her. In this case, I had no choice but to file a claim against my insurance (her insurance tried to claim against mine but was not successful). I had to pay a deductible and that was it. Remember, if they claim you're at fault, they will file against your insurance. In this case, it's moot if you file, because your insurance will make you jump through hoops anyways (even if you leave your car unrepaired). If their claim against you is successful, there's a good chance your rates will go up. In my case, blame could not be determined reasonably so neither side got the other to pay damages.

By contrast, I had a woman back into my car in a parking lot. Severely damaged the hood and the front bumper. She admitted liability and I filed directly with her insurance. In this case, I had no deductible and they paid for my rental. Was surprisingly painless. If they admit liability, your rates won't change because you never file with your insurance.

If the other side has no insurance, what will happen when you file is that your insurance company will sue the other side to recover damages (most insurance companies arbitrate disputes with one another).

Your damages are almost certainly more than your deductible

Unless we're talking a small dent, most damages mean your vehicle will have the damaged parts disassembled, repaired/replaced and then painted to match the vehicle. Rarely will that be below $1000. I had a side panel and mirror damaged. Was about $2500 in repairs.

Can you be without your vehicle for some time?

If you drive to work and don't have loss-of-use coverage (where the insurance company gives you a rental), you might be without a vehicle for several days. That might cost you more than your deductible would alone.

The other side will probably sue your insurance, not you

Unless you're pretty wealthy, the other side wants a payday. Your insurance company has much deeper pockets and they make a much more tempting target (see your local attorney billboard if you need proof "We take on the big insurance companies!"). Even if they do sue you directly, your insurance company may be obliged to defend you in most circumstances regarding your insured vehicle. Whether or not your insurance requires you to have filed a claim will have to be answered by your insurance company. I'd ask your insurance representative about this type of circumstance and how they handle it.

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Machavity
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4

Suppose my deductible is $1,000 and that the other driver is at fault. I own the car outright, so there is no financing involved.

Here is the complete instruction on what to do if you involve in an accident come with a with property damage : What to do in case of an accident in the US.

You must file a police report and notify your insurance company to protect yourself against possible legal feud. A police report and insurance investigation will confirm who is at fault and the claim can be initiated. After confirming the other party is at fault, you can either claim the damage directly upon the at-fault party or through your insurance company arrangement.

If you don't go through such process, you will be in risk of being claims as at-fault and the opposite party may claim your insurance and nullify your car insurance no-claim bonus.

Note:

  1. Any party involved in a car accident can claim the damage against the involved car insurance without any agreement. To justify a non-report car-incident, one must be very sure that all party involved is happy with the settlement. Any damage that exceeds $1000 always come with a hidden repercussion, that may cost many time more than one can imagine.

  2. When not to report a car accident to the police :

    There’s no requirement to report an accident to the police if there are no injuries or damage to property (other than your own).

mootmoot
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    Just FYI, damage that occurs on private property may not require a police report (indeed, the police may not even take a report, since it is not considered their jurisdiction). If it happens on a public road, then you are legally required to report it. – Machavity Sep 03 '19 at 13:43
  • @Machavity Go to know that. But it also depends on what kind of accident, e.g. when a car being knocked by a truck and ramp into a house. – mootmoot Sep 03 '19 at 13:47
  • Thank-you! A police report was filed. – Peter K. Sep 03 '19 at 15:55
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    @Machavity: your claim about the public road requiring a report is not necessarily true. Each state has different rules, and for many states small dollar-value property-only damages are not required to be reported. – whatsisname Sep 03 '19 at 16:41
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Your insurance's policy regarding changes to the premium should be specified in the contract, so that's what you should check. The first thing to find out is whenever the premium is affected only by claims, or also by the accident alone, even if you don't claim anything.

Often, your premium will decrease when you have no accidents for some time. If you report an accident but don't make a claim, it will not increase, but it may not decrease (as as it could have) either, so reporting a small scratch can be in fact a net negative. On the other hand, a failure to report an accident in a timely manner usually means you lose all coverage, even if you're not at fault.

If your premium is only affected by claims (not accidents), then it makes sense to report every accident. The decision to file a claim still depends on the math. For instance, when you're not at fault, you lose money because your premium didn't go down (e.g. $500 over several years before the effect ages away, typically after 3-7 years), but you get more than the other party would be willing to offer. So if the other party is offering you $1000 and your insurance is expected to pay you $3000 - $1000 = $2000 after the deductible, making a claim will get you extra $500.

Dmitry Grigoryev
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AFAIK, insurance companies insist on finding someone to blame for e an accident. Typically, that will be either you or the other driver. If responsibility for the accident is assigned to the other driver, it will not be considered an "at fault" accident for you and is less likely to impact your rates. I say less likely because I agree with the previous poster that a carrier may still jack up your rates because you live in a neighborhood that is dangerous to your car, or because the sky is blue, or something.

davagain
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