Getting into an accident can be scary. Fortunately, your car insurance can help cover your financial responsibilities. But if the accident does not result in major damage or injuries, you might wonder, “Should I call my insurance company after a minor accident?”
The short answer is yes — it is always a good idea to let your insurance company know when you have been involved in a collision. However, you might choose to pay for the repairs out of pocket, depending on the circumstances.
When might someone consider paying out of pocket
Paying out of pocket for a car accident always comes with a certain level of risk. With that being said, using insurance may not always be required. Not using insurance to cover an accident means that your premium should not increase due to a claim, which is a major benefit. Here are some types of accidents where using your car insurance may not be necessary:
An inexpensive accident with just you or your car
If you get into a very minor collision that does not involve any other drivers, you can probably get away with paying for any damages out of pocket. An example would be driving into an object and getting a dent in your bumper or a crack in your windshield, but there is no other person injured or extensive damage caused. In this case, your insurance policy deductible might be higher than the cost of repairs, so filing a claim wouldn’t be financially beneficial.
Very minor accident with one other driver
The other situation where it might make sense to pay for accident damage out of pocket is if you get into a very minor collision with another driver. A classic example is getting rear-ended at a stop sign or brushing up against another car in a parking lot. Assuming the damage is minimal and both drivers agree on who was at fault, not using insurance could make sense.
However, insurance professionals generally only advise avoiding insurance in this situation if you can trust that the other driver will not file a claim without you knowing. If you feel any hesitation, it may be worth contacting your insurance company to avoid surprises down the line.
When you need to contact your insurance company
Car insurance is designed to protect your finances in the event of an accident, whether you cause a collision or get hit by another driver. While you might be able to get away with not contacting your insurance company after some accidents, more often than not, you will need to notify them. Here are some situations where you should contact your insurance company:
Someone was injured
If you or the other driver involved in a collision are injured, you need to contact your insurance company. The bodily injury liability portion of your policy will cover any injuries unless you live in a no-fault state, in which case personal injury protection (PIP) coverage will typically kick in. Medical bills after an accident can be expensive, even if the injuries are minor. Using your insurance could save you a lot of money that would otherwise come out of pocket.
You do not trust the other driver
If you get into an accident and you do not trust the other driver’s account of the incident, make sure to report the accident to your insurance company. An example of this would be if you and the other driver cannot agree on who caused the accident or if you suspect that the driver may fake an injury to get more money from your insurance company in the future.
The costs will be expensive
In the event that you get into an accident with major damage that will likely result in expensive repairs, let your insurance company know. Your property damage liability (PDL) should cover the other driver’s vehicle repairs if you are at fault. Similarly, if you are involved in a collision where another driver is at fault, their PDL should kick in to cover your vehicle’s damages. If you have full coverage, using insurance means you will not have to cover the full cost of repairs out of pocket in a covered accident, regardless of fault.
Things to consider before paying for an accident out of pocket
If you decide to pay for an accident out of pocket, you should consider a few things first. Even if a collision is minor and there are no injuries, that does not automatically mean that avoiding insurance is the right move. Here are a few things to think about:
Make sure the damage estimate is correct
First, make sure that the estimated repair cost for any damages is accurate. Do not rely on a quick search engine search to see what a certain repair might cost. Instead, go to a local body shop and have a mechanic give you a quote after examining the vehicle in person. The damage estimate may be significantly higher than expected and you may not be able to file a claim if you wait too long after the incident. There could be internal damage that you can’t physically see, which might lead to more extensive costs.
Make sure you trust the other person
Before you decide to pay for an accident out of pocket, it is important to make sure you trust the other driver involved. You might both decide to cover the collision out of pocket, but there is no guarantee that the other driver will not file a claim later behind your back. If you have any doubts, it is a smart idea to contact your insurance company for peace of mind.
You might have accident forgiveness
Some drivers have accident forgiveness included in their car insurance policy. With accident forgiveness, your rate will not increase after your first covered accident, assuming it is not a major accident. If you have first accident forgiveness, you might decide to contact your insurance company and file a claim, as it should not have any impact on your premium.
Paying out of pocket might offer greater financial flexibility
If money is tight, paying out of pocket after an accident might make more sense. It allows you to pay on your own schedule, which means you could avoid paying a large amount at one time. You can also get several repair quotes from different shops, whereas some insurance companies do not let you choose the mechanic.
If you get a new quote, you may have to disclose the accident
When you get a car insurance quote, you are typically asked to disclose any recent accidents or traffic violations you have had. This includes incidents that were not covered by insurance. If you get a new car insurance quote, failing to disclose recent accidents could jeopardize your ability to get coverage.
Exchanging information is important after any accident
Even in the event of a minor accident, it is a good idea to exchange information with the other driver and gather evidence of the collision. If the other driver decides to sue you in the future, having photo evidence of the damage could help you avoid an unnecessary legal battle.
Frequently asked questions
Does insurance go up if you pay out of pocket for damages?
No, your insurance premium should not increase if you decide to pay for accident damages out of pocket. However, if the other driver decides to file a claim without you knowing, your insurance rate could increase.
Will my insurance company find out if I get into an accident?
Insurance companies can determine your accident history by looking at your driving record. Unless you file a claim with your insurance company, or the police are called to the scene of the accident, it is unlikely that your insurance company will find out about a collision that you do not report.
How much do car repairs typically cost?
As of 2019, the average cost of a property damage-only car accident was $4,600, according to the National Safety Council (NSC). However, the true cost of repairs will depend on the severity of the damage, the type of vehicle and where you live.
How can I lower my rate if it increases after an accident?
If your car insurance rate increases after an accident, there are a few things you could do to save money. Look for discounts you can take advantage of, consider raising your deductible, work on improving your credit score (if your state includes it as a rating factor) or think about switching to a different provider.