When Not To File An Insurance Claim

Regular readers of Autosavant might notice that “my wife” and “accident” are common themes in my writing.  Unfortunately.  Back in December, my wife was in a minor accident as she was leaving a street parking spot at the local post office.  She was signaling and pulling out into a one-way street from the right side.  She said that she checked her mirrors and looked over her shoulder and didn’t see anything, but there was a 2005 Lincoln Aviator coming down the street.  She didn’t see it, and her van’s left-front fender collided with the Aviator’s right-rear corner.

The resulting damage to both vehicles appeared to be very minor.  In fact, I used the scratch removal task as the opportunity to test a scratch-removal product, ScratchPro.  His vehicle appeared to have similar damage to what our Sienna sustained, and at the time of the accident, though they both exchanged insurance information, the other driver (an elderly man) said, “I don’t want to deal with insurance. Let’s just keep this between us.”

That was music to my ears, because of our, ahem, colorful accident/claim history, we’ve already been non-renewed by one insurance company, and its replacement charged us 50 percent more annually than the non-renewing one did.  We changed to a third insurance company when enough time had passed so that we had only one accident claim in the past three years.  A new claim would put us at risk of a non-renewal again, which would mean searching again for  new insurance provider, again from a position of weakness, and again paying an arm and a leg for insurance.

My wife and I were both satisfied with the results of my repairs, and I asked her if we should reach out to the other driver to offer my services in removing the similar scratches from his vehicle.  We hadn’t heard anything from him in several weeks, so we assumed that he had taken care of them on his own and that the matter was closed.

As I learned from my eighth grade geography teacher (but must have forgotten along the way), don’t assume, because it makes an ASS out of U and ME.

Last week, we received a phone call from our insurance company asking us about an incident on December 18, 2012.  It seems that the man who said he didn’t want to deal with insurance companies decided to put a claim into his insurance company.  They paid the claim for him, and they were now asking our insurance company for reimbursement.

Knowing that the repairs to my wife’s van were, literally, free (the ScratchPro that I used for the repairs was a free product-testing sample that I just hadn’t had a chance to try until then), I figured that this other driver’s repairs would, at most, be a couple hundred dollars.  Not willing to have a claim on our insurance record for a claim that would be a few hundred dollars, I was aghast.  Was there a way to just pay this small claim ourselves to “save” the black mark of a claim (and the resulting rate increase) even after the other driver had submitted it to his insurance company, and that company had approached mine about payment (and there were now two claim numbers generated)?

As it turns out, there is a way!  But even after knowing that, I am still not certain what course of action we will choose.

I learned that insurance companies are more than happy for their customers to do the insurance company’s job and pay a claim.  My company quickly provided me with the other driver’s insurance company’s information, and the other driver’s insurance company was glad to supply me with the cost of the claim.  My company advised me that if they had no payout, the claim would be closed and it would not count as a payout.

But the amount of the claim was much larger than I had anticipated.  Remember, I repaired my wife’s 60,000 mile 2008 Sienna to our satisfaction for free.  The other driver’s 175,000 mile 2005 Lincoln had a repair cost (parts and labor) of $1,882.34.  Sticker shock!  That was about five times more than I had expected.  I immediately suspected that something fishy was going on, so I obtained the estimate and photos of the damage to the other vehicle.  In comparing the photos, I could tell that the damage was caused by my wife.  The biggest problem was that the bumper required replacement due to some creases.  The second biggest problem was that the sheetmetal underneath the bumper was bent.  It’s not visible until the bumper is removed, but it required additional body work labor.

The next thing I did was to reach out to my insurance agent to estimate what the surcharge would be if this accident hit our claims history.  He came back with $175-200 annually, which means it would take 9-10 years of lower premiums to recover the $1,882.34 outlay.  Economically, it does not make sense at all for us to pay the claim ourselves.  The accident surcharge will fall off our rates after three years.

But here’s where it gets tricky for us:  asking the insurance company to pay this claim and having a claim on our record could mean that the next claim, if it happened in the next 2+ years, could put us at risk of a non-renewal.  I’ve already gone through that once, and in all likelihood, it would mean much higher rates, the aggravation of shopping for insurance again.  Plus, here in the U.S., we can’t get , so the rates are not all that great.  Fortunately, I’m not a young driver, or I’d really be in trouble when shopping for insurance – just ask our writer, James Wong, about his experiences with that back in 2011.

We have not yet decided on how to proceed.  Years ago, we filed a claim that ended up as a $300 outlay after our deductible, and 18 months later, that turned out to be the first of three accidents that led to our original insurance company non-renewing our policy.  Had I been able to go back in time, I would have gladly repaid that first claim, but you can’t do that after it’s been paid.  Because I’m afraid of something like that happening again, I am leaning toward paying the claim and not having it as a mark against our record.

Have you run into a similar situation?  How would you handle this if you were me?  I have about one more day to decide.

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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  1. How about this for rough justice! My mother had a very minor fender bender in the UK early last year. According to her, she pulled out of her driveway and turned immediately right into a sidestreet right next to her house, which is a corner block. Seeing a van coming up to the T-junction at speed she stopped but somewhat towards the center line. The van was towing a slightly wider trailer which just scraped the rear wheel arch and gas tank lid of her car as it went past, doing no more than a couple of hundred pounds ($300) worth of damage. The driver was a council worker and the van and trailer council owned vehicles. He said “no worries, my fault – it will be taken care of by council insurance”. Unfortunately there were no witnesses and my mother naturally immediately got onto her own insurance company who organised a repair to her car. Far from there being “no worries”, the council decided to contest the case (possibly having a policy against accepting responsibility where there are no witnesses), which as of March 2013 has still not come before a judge. The insurance company however, counting this as an open, potentially “at fault” case, and particularly as my mother already had prior history, promptly increased her insurance premium from GBP950/year to over GBP2000 (approx US$3000)! This was exacerbated by her turning 75 in 2012 at which point it becomes very difficult to obtain insurance at a reasonable cost in the UK. Her (tiny 1100cc) car is pretty much her only means of mobility so despite being a pensioner she has been forced to accept the increase. It will take several years for the accident to be removed for her claims history so effectively a $300 scrape has turned into a $1500 penalty in year 1, and probably more like $5000 of increased premiums while she repairs her no claims history!

  2. Definitely rough justice, Bob! I don’t suppose that at this point there is an opportunity to pay the claim out of pocket? By the way, we decided to do that with our situation. I don’t want to risk being non-renewed and having to go through that hassle again should another incident happen.

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