Subject: Car Damage Accident – $8,000 Repair: Pay Out of Pocket or File an Insurance Claim?
We recently had an accident where we hit a pole in our own yard—no other vehicles were involved. The estimated cost for repairs is around $8,000.
We also have a previous claim from nearly three years ago that amounted to approximately $25,000 involving another vehicle.
Here are a couple of questions I have:
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If we decide to file a claim, is there a risk that the insurance company might refuse to renew our policy after two claims?
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Given the potential for increased premiums down the line, would it be wiser to pay out of pocket now to avoid future rate hikes?
Thanks for your input!
When deciding whether to file a claim or pay out of pocket for the damages, there are several factors to consider:
Risk of Renewal Issues: Having two claims in a relatively short period (especially one for a significant amount) can increase the likelihood of your insurance company being hesitant to renew your policy. Different insurers have different thresholds for how many claims are acceptable, but two claims in three years can be seen as a potential red flag.
Future Premium Increases: Filing a claim will likely lead to an increase in your premiums, especially given your prior large claim. Depending on your insurer, this could mean higher rates for several years. If you pay out of pocket for the $8k, you may avoid increases in your premiums, which could ultimately save you money in the long run.
Financial Situation: Consider your current financial situation. Can you comfortably afford to pay the $8k without it causing you any financial strain? If paying out of pocket is not a financial burden, it might be worth it.
Policy Deductible: Check your insurance policy for your deductible. If your deductible is, for example, $1,000, then filing a claim would mean you’re only getting reimbursed for $7,000 of the $8,000 repair. This can impact your decision.
Long-Term Impact: If you do decide to file a claim, think about how it might affect your insurance in the long run—including the potential for being labeled as a high-risk insured and the possibility of having to find another insurer with more favorable rates.
Ultimately, weigh the immediate financial impact against the long-term effects on your insurance premiums and overall insurability. If it’s feasible for you to pay out of pocket and you prefer to avoid future complications with your insurance, it may be the better route. However, if it’s too much of a financial hit, it could be worth consulting with your insurance agent to see how a claim might impact your policy.