claims series: should I file an auto insurance claim?

2017 10 23 Say Blogphoto Claimsseries Whentofile

You find yourself in a little fender bender and are left to question, "should I file an insurance claim or not?" The damage doesn't seem too bad, and the other driver says he just wants it fixed. Is it worth reporting and potentially taking a hit on your insurance premium?

In this particular situation, we're going to say yes, and not just because we're an insurance company wanting you to tell on yourself. There are actually instances in which filing a claim may not be worth it, so here are our general guidelines on when to and when not to file a claim:

When you should file a claim

Short version: Any time you're in an accident with another vehicle, person or someone's property, it's almost always best to file a claim.

The main reason is to protect yourself from any potential lawsuits. Even if the other person pinky swears not to sue, it's in your best interest to notify your insurance company and get proper documentation of all damages, just in case. Not only are insurance companies well-versed in the ways of a courtroom, but also your liability coverage (made up of Bodily Injury and Property Damage coverage) is meant to protect you from lawsuits and help with legal costs if you do end up getting sued.

The second reason we say file the claim is to protect yourself from hidden costs (outside of the lawsuit scenario which we just discussed). Let's consider a simple fender bender.  

Potential Damage Costs in a Fender Bender Claim:

In a 2010 study, the Insurance Institute for Highway Safety wanted to see how much damage would result from vehicles hitting each other at just 10 mph. They found repair costs per vehicle ranged anywhere from $850 to $6,015. That means your tiny, two-car fender bender could cost you $1700 to $12,030 out of pocket!

Potential Premium Increase Resulting from a Claim:

Now let's consider the costs you may face from a premium increase if you do report the claim. It's very difficult to tell you an exact increase percentage since it really depends on your state of residence, the type(s) of coverage needed for the accident, your insurance company's rating plan, etc. We can tell you, however, that according to a study done by Insurance Quotes and Quadrant Information Services, the average premium increase after filing a single claim was 44.1 percent. Now, that's just an overall average for claims, not claim type. The average increase after a Bodily Injury claim was 48.6 percent, while a Comprehensive claim was only a 2 percent increase.

For this example, we'll go with the general 44.1 percent increase. In 2014, the average cost of an auto insurance premium in the United States was about $910 per year, according to Quadrant Information Services.  With that premium and a 44.1 percent increase, a fender bender accident could potentially cost you an extra $401 a year. Since claims tend to affect your premium for three to five years, the accident could cost you a total of $1203 to $2005 in additional premium costs.

While the additional premium costs may seem like a lot initially, an extra $33 a month doesn't seem to terrible compared to potential lawsuits and out-of-pocket costs we mentioned above.

When You Probably Don't Need to File a Claim

Short version: If you got into an accident with just your vehicle, you're injury-free and no other property was damaged, then you may not need to file a claim.

Say you dinged your door on a fence post. If you take your car in for a repair estimate and the cost to fix the dent is less than your Collision deductible, you may not want to file a claim. Just make sure there is zero chance for hidden damage.  For instance, if you find out months later that the fence threw the alignment off and caused extra damage, you may be out of luck for coverage.


Need to file a claim with Say? Call (800) 225-5729 or log into your MySay account and click "claims" in the top navigation.

Next in our Claims Series: Do's and Don'ts of Getting an Estimate

Posted October 23, 2017 in insurance know-how.