Does It Pay to Make a Car Insurance Claim After a Minor Accident?

Auto insurance is typically supposed to cover the costs when a collision occurs. A driver who causes an accident could make a claim with their collision coverage. A driver who is involved in an accident caused by someone else could make a claim with the responsible party's liability insurance.

Sometimes, an accident will appear to cause pretty minor damage. In those situations, it's important to consider whether it pays to make a claim after the crash or if the responsible driver should just pay for the damage personally out of their checking account. Here's what drivers need to know.

Why making a claim may not be the wisest move

There's a solid argument to be made for not reporting a minor collision to insurance -- especially if no one was hurt and property damage was limited to a few hundred dollars.

Reporting an accident to insurance can result in premiums becoming more expensive. In some states, a single crash for an at-fault accident can cause auto insurance premiums to increase by as much as 74%. 

This is a huge increase in the cost of insurance. And, those who are to blame and who report an accident may see premiums increase not just because they present a higher risk with the crash on their record, but also because they lose good driver discounts. 

Instead of facing the costs associated with making a claim, a driver may prefer to just pay out of pocket. This is especially true in situations where a deductible applies. If a policyholder causes a crash, damages their own car, and does $1,500 in damage, their collision policy would cover it minus the cost of any deductible. But if they have a $1,000 deductible, they'd end up making a claim to get $500 back and dealing with higher premiums that could add up to more than the insurer paid out. 

Making an insurance claim can also take time and energy. It means dealing with adjusters and trying to haggle over how much the insurer should pay out. If a driver can just pay out of pocket -- or get a check from the other motorist responsible for the crash that covers their damages -- they may prefer this option. 

Why there's an argument for reporting the crash to insurance anyway 

While there are certainly reasons to avoid making a car insurance claim, there's also an argument to be made that it's important to report collisions -- especially if there are multiple motorists involved. 

The biggest risk of not reporting a crash is that the damage could turn out to be more serious than originally anticipated. The at-fault driver may not have the money or be able to pay if that happens. In that case, relying on insurance would be important, but that might be a problem if the crash wasn't reported.

Ultimately, it's important to carefully consider whether the benefits of avoiding a premium increase and the hassle of an insurance claim outweighs the risk of not alerting insurance to a crash and potentially facing problems if damages are worse than they appear.