It’s quiz time: While driving your SUV, you are involved in a minor, low-speed accident. Fortunately, no one is injured, but there is some damage to your vehicle – more than just a scratch – and maybe to someone else’s car or property.
Do you inform your auto insurance company about it, or keep the matter quiet and pay any repair costs out-of-pocket?
Concerns about auto insurance rate hikes are often the determining factor behind your answer, according to a Consumer Reports study. But there are some important factors to weigh as you determine your best course of action.
When to report the accident:
Seven in 10 auto accidents in the US in 2011 involved at least two vehicles, according to US Department of Transportation data, as did 52 per cent of the car insurance claims filed in recent years by more than 31,000 Consumer Reports subscribers surveyed last summer.
If your accident falls into that category, you should always report it – especially if you may have been at fault – because your insurance coverage protects you against liability for harming others.
Your insurance company and legal considerations might require you to report in such cases, but its also in your own best interest to officially document the facts of the case when you’re involved with a stranger in a potential damage claim situation.
Even if you could work out a private arrangement with another reasonable person to keep the auto insurance companies out of it, repairs often cost more than people anticipate.
For example, in a test by the Insurance Institute for Highway Safety, when a 2010 Toyota Corolla rear-ended a 2010 Toyota RAV4 at 10 mph, the Corolla had more than $3,800 in front-end damage and the SUV incurred more than $6,000 in rear damage, because of the vehicles’ bumper height mismatch.
The Corolla’s damage looked minor, and the RAV4’s was visually almost imperceptible. In 14 similar trials, the cheapest damage in 14 involving seven vehicle pairings produced almost $3,000 in total losses – six times the typical $500 collision deductible.
In addition injuries to you or other people involved in the accident, may not be apparent immediately. The adrenaline rush accompanying even a low-impact crash can mask injury symptoms, and soft-tissue damage can take 24 to 48 hours to show up. Bogus injury claims are another possibility, which will be difficult for you to prove without help from your insurance company.
If you don’t report your accident immediately and are hit with big costs down the road, your auto insurance company might not cover you because their window of opportunity to investigate the claim has been lost.
When it’s a toss-up
When the damage for an accident occurs only to your property, you have a more difficult choice make.
Filing a claim could produce a tempting payout, but you need to consider the unknown factor of how your claim might impact your premiums.
According to Consumer Reports, consumers won’t know in advance how much their premiums will increase, and for how long, in order to weigh that against a claim payout. But among the survey respondents, seven per cent of claimants said they felt their insurer unfairly raised their premium as a result of a claim.
Most states regulate “chargeable” accidents, which are loss payouts that auto insurers are allowed to count against your driving record in calculating your risk and setting your premiums. The rules vary, but payout thresholds of $500 to $1,000 are typical, which means that accidents costing the insurer less than that can’t raise your rate.
Major insurers, including ICBC Autoplan, will also have their own loyalty programs, which give “accident forgiveness awards,” based on how long you’ve been with the company and your good driving and payment record.
When not to report
If the damage is minor and confined to your own vehicle and property, maybe from backing into your own fence or garage door, you’re typically not required to report it to your insurance company if you choose not to make a claim.
It also doesn’t make economic sense to do so if the repair cost is smaller than or not sufficiently bigger than your collision coverage deductible.
Excerpted from the Buffalo News
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