How to Decide Whether to Make an Insurance Claim or Pay Out Of Pocket for Your Auto Body Work

We all dread to be in an auto accident. On top of the anxiety and possible embarrassment from the accident itself, you’re doubly anxious about the potential spike in your car insurance.

After a minor auto accident, many car owners ask themselves if they should file an auto insurance claim or if it would be better to pay out of pocket for the necessary auto body work.

There are some occasions when both are valid options, but there are some when one is better than the other. Here we’ll discuss exactly how to figure out which one works for your specific situation.



File an Insurance Claim or Pay Out of Pocket?


1. Other Drivers are Involved

Maybe you’ve dented someone’s car and the other party suggested to settle the matter privately. Should you do it?

If you have caused any damage to other vehicles or people, filing a claim is always necessary. If you choose to pay out of pocket for the auto body repair, you’ll be at the mercy of the other driver. What if they ask for more money for repairs or threaten to file a lawsuit?

Paying out of pocket might seem like a simpler approach here, but it will leave you vulnerable down the line.



2. Cost of Claim is Higher than the Deductible

Let’s say your deductible is $500 and the accident will cost you $3,000 in repairs. In this case, it makes sense to file an insurance claim because the cost of your claim is higher than your deductible.

You might argue that your insurance premiums will increase after this, but that’s not always the case. If you have a good driving record and little to no accident history, there is a low risk of increased premiums. If you don’t have a great record, then it’s best if you cover the cost of repairs out of pocket.


3. Accident Forgive Policy

Many insurance companies offer accident forgiveness to attract customers to buy an auto insurance policy. This policy is essentially a free “get-out-of-jail” card that allows you to file an insurance claim without worrying about insurance price spikes.

This policy can vary from one insurer to the next, so make sure that you understand your coverage. If you have this kind of coverage, then it only makes sense to file a claim.


4. Recent Insurance Claim

If you have been involved in an accident and have filed a claim recently, it will be better to pay out of pocket for a luxury auto body shop repair. Filing an insurance claim after a recent accident is a surefire way to raise your premiums, costing you more money in the long run.



Understand Your Auto Insurance Coverage


Filing an insurance claim is almost always applicable when there’s an auto accident. However, there are some instances where it makes sense to cover the cost of auto body work out of pocket. This is why you must understand your insurance coverage before setting out to the road. Always compare insurance quotes to find one that best fits your needs and financial situation.

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