Is It Ever Worth It to Pay Out-Of-Pocket for Damages?
Last Updated on May 5, 2020
Car insurance is designed to prevent you from having to pay out-of-pocket for necessary car repairs. However, there are some situations where it’s actually worth it to pay out-of-pocket for your car’s damages. Here’s when you should consider paying out-of-pocket for damages and why it makes sense.
The Accident Is Minor
If an accident is very minor, it doesn’t always make sense to file an insurance claim. Insurance claims take a lot of time and effort to process, and they can increase the cost of your monthly insurance premiums. If you’ve only gotten into a small accident and the damage is very minimal, it may make more sense to pay for the repairs out-of-pocket instead of involving your insurance company. This is particularly true if you get into a single-car accident that doesn’t involve anyone else. With minor accidents, the cost of the repairs may be lower than your deductible, which means that your insurance won’t cover it anyway. In the case of a minor accident, take your car to a local mechanic and get a quote to determine the overall cost and whether it’s worth it to file an insurance claim.
You’re Worried About Your Driving Record
The other instance where you might consider paying for your damages out-of-pocket is if you already have a history of accidents or other problems on your driving record. Insurance companies use a number of different factors to determine how expensive your premiums are, and the number of claims you have filed recently is one of them. If you have filed one or more claims over the past several years, your car insurance prices will go up significantly. Because of this, you might prefer to pay for your car damages out-of-pocket instead of relying on your insurance. Before you make the decision, go to your local mechanic and get a quote for the damages. Then, consider how much your insurance price might go up if you file a claim. In many cases, it is actually more affordable in the long run to pay a repair bill once than to pay a higher premium for the next several years.
Keep in mind that your insurance claims will eventually fall off your record. Depending on where you are and the insurance company you are working with, your insurer may only look back between three and seven years. Over time, your insurance prices will go down if you maintain a clean record. Eventually, you may even qualify for accident forgiveness, which ensures that your rates won’t go up even if you have to file a claim. It’s important to note that your rates will generally only go up if you file an at-fault claim. If you weren’t at fault in the accident, you usually won’t see higher rates after filing a claim.
When Should I File a Claim?
There are some instances where it is important to file a claim with your insurance, even if you could pay for the damages out-of-pocket. If someone was hurt or killed in the accident, you should always make sure to file a claim and make sure to file a police report as well. At this point, you’ll need to make sure that your insurance company is aware so they can make the appropriate payments if you are found at fault.
You should also notify your insurance company if you believe the other party in the accident is going to file an insurance claim. Even if the accident wasn’t serious, it is still very important that your insurer is aware of what happened, so they can prepare for any potential liability claims. If you fail to notify your insurance company of an accident you’ve been involved in and they find out later, you could incur penalties and your rates will likely go up.
The other instance when you should consider filing an insurance claim is if the damages from the accident are notably higher than your deductible. At that point, you can save a significant of money by filing an insurance claim, even if your rates do go up in the future. Ultimately, your insurance is there to help you if you encounter any financial challenges, and it’s important to take advantage of the service they offer.
Should I Talk to My Insurance Company?
If you’re unsure about whether or not it’s worth it to file a claim, your insurance company might actually be able to help you. Their claims specialists can give you advice about whether or not your claim will get approved, or whether it makes more sense to just pay the repair costs out-of-pocket. The only time when you shouldn’t talk to your insurance company is if you’ve already had at-fault accidents in the past. At that point, they may decide to raise your rates if you come to them with a report of another accident.
How Can I Prepare for Accidents?
Accidents can happen to any driver, no matter how safe you are. There are so many factors on the road that are out of our control. Having a small emergency fund is a good way to prepare for the possibility of an accident. Ideally, you should at least have the cost of your deductible saved up ahead of time in case you need to prepare for minor repairs. If you can save more, then you’ll be able to pay for more out-of-pocket and avoid having to pay serious damages.
Practice safe driving habits whenever you can. Avoid driving if you’re tired or under the influencer – consider taking a ride-share or public transportation instead in these circumstances. Invest in a car that has modern safety features to protect you in the event that you do get in an accident. Taking small steps to prevent accidents will lower the chances that you’ll need to pay out-of-pocket for damages.