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While auto insurance
companies insist they want to know about the smallest accident, it's
clear that if your deductible is more than the cost of your repairs,
you are better off paying the bill yourself and leaving your claim
unreported.
There is no law that requires you to report an accident to your auto insurance
company, and you should remember that every time you file a report with
your auto insurer, even if the damage is less than your deductible, it
goes on your insurance record. Robert Passmore of the Property Casualty
Insurers Association of America (PCIAA), an industry trade group, says
that insurance companies always want to know about accidents, even when
repairs cost less than your deductible. Even though failing to report
an accident to your insurance company is not a crime, most policies
specify that your insurer has no duty to cover your accident if you
haven't reported it promptly.
"It's something to be aware of," Passmore says. A
small claim is unlikely to affect your individual premium, he adds. But
your premium can be affected when the claims start adding up and the
insurer has to pay for them.
So
when should you file a claim with your car insurance? Common sense says
if the repairs cost less than your deductible you're better off paying
for them on your own and keeping the story to yourself. The wisdom that
says take a higher deductible on your insurance to lower your rates
extends to this scenario. Take the money you save on the lower rates
and deposit it into a savings account. When an accident happens, you'll
have the money for repairs even if the cost is slightly more than your
deductible.
| Common
sense says if your repairs cost less than your deductible, you're
better off paying for them on your own and keeping the story to
yourself. |
If
you already have a speeding ticket on your record, check with your
state's department of insurance to find out what its regulations are on
nonrenewal. If filing a claim for an at-fault accident, in addition to
your previous ticket, would make you a mark for nonrenewal, think twice
about filing.
But if another car is involved, or you have a passenger in your car, you may want to think twice about not
filing. "You never know what's going to arise out of an accident,"
Passmore says. "You never know who might come out of the woodwork and
make a claim against you. [If unreported] it puts your insurer at a
disadvantage to defend you."
In some
cases, especially where no bodily injury is involved, you may be
tempted to personally settle the damages with the other party without
involving your insurance company or the police. But be careful —
especially if you weren't at fault and suffered damages.
"What's
very common is that people underestimate how much it's going to cost to
fix their car," Passmore says. "They see an indentation in their bumper
and think it's going to cost $50 or $100, but they might be surprised."
In
addition, because injuries are not always immediately apparent, you
should report an accident in case you sustain injuries that show up a
day after the accident and need medical treatment. Accidents should be
reported to police because it provides a neutral and written account of
the accident. It also gives your insurance company documentation of the
accident, including time, date, conditions, injuries, if any, and
responsibility.
Once
you contact your auto insurer, be prepared to have the information
remain in your file and dog you if you change insurance carriers. Auto
insurers share information on policyholders' histories. But when the
damage is extensive, it's appropriate to take advantage of the
insurance you've paid for.
Jeff McCollum,
spokesperson for State Farm, says that most insurance companies
evaluate accidents and property damage on a case-by-case basis for
potential premium increases. Many insurers, including State Farm, tend
to be lenient with your first accident or moving violation. However,
there are many variables, including the scope and size of the accident
and the nature of the moving violation.
"For
somebody who has a good driving record and has a fender-bender, that's
really not going to change the way you're looked at," McCollum says.
"But someone with a history of accidents and claims is going to be
looked at differently."
After multiple claims, possibly even your second, your rates could see an increase, he adds.
Because
of the potential for a rate increase or nonrenewal, you may want to
view your car insurance like your home insurance: Plan ahead to pay out
of your own pocket for smaller repairs and make claims for extensive
damage.
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