UPDATED: Mar 13, 2020
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So, you’re driving home from work, minding your own business, and somebody runs a red light and smashes into your car. Now you’re standing on the side of the road, exchanging information and waiting for the police to show up. This accident was clearly not your fault. The other motorist’s insurance will pay for the damage.
So you’re in the clear, right? Why bother filing a claim if it’s going to cause your rates to rise?
To begin with, let’s consider whether your rates will rise in the first place. To do that, we’ll need to take a look at how insurance rates are calculated.
How Insurance Rates Are Calculated
There are many factors at play when it comes to calculating your car insurance rates. No single factor is necessarily going to cause your rates to rise or fall – although at-fault accidents and serious infractions like a DWI or reckless driving will always cause a hit to your rates.
Here are some of those factors:
- Switching vehicles. Some vehicles are more dangerous than others. If, for example, you sell your Prius and buy a turbocharged Ford Mustang, expect your rates to rise.
- Your age. There’s not much you can do about this. But more experienced drivers tend to pay lower rates. The exception to this rule is senior citizens, whose rates will be higher than those for middle-aged people.
- Customer loyalty. Many insurance companies offer discounts to long-term customers. Instead of switching insurers every time someone offers a slightly better rate, consider sticking with one insurer. It will pay off in the long run.
- How much you drive. The more you drive, the more likely you are to get in a crash. If your job requires you to spend a lot of time on the road, you’re going to pay more for auto insurance.
- Your credit score. Fairly or not, insurance companies take your credit history into account when calculating your rate. If you’re deep in debt, you’ll end up paying more for insurance.
- Your driving record. Traffic tickets will always cause your rates to rise, as will at-fault accidents, although some insurers offer accident forgiveness if you have an otherwise clean record.
Not-at-fault accidents will generally not cause your rates to rise, although if you get hit several times in a short period, the insurance company may assume it’s you. In that case, they’ll raise your rates, but that’s not likely to happen.
One thing we didn’t mention in this list is that failure to report an accident can also cause your rates to rise. If you’re in a crash and there’s a police report, your insurance company will be notified. In this case, failing to report a not-at-fault accident is worse for your rates than reporting it and going through the process.
What Happens if You Get Hit in a Parking Lot?
Not all accidents involve another insurance company. We’re talking about parking lot fender benders, or someone hitting your car while it’s parked on the side of the road. Many times, motorists will take off. And if they don’t leave a note, they’ve left you holding the bag for repair costs.
So what do you do if this unfortunate situation happens to you?
In this case, you’d better have uninsured/underinsured motorist coverage. This insurance policy rider will pay for the cost of repairs, even if the other driver is nowhere to be found. Furthermore, it covers your costs if you’re in an accident with a motorist who doesn’t carry their own insurance policy. Sure, they’ll get a ticket for driving uninsured. But only an uninsured/underinsured policy will pay for your vehicle damage or injury.
What About Acts of God?
If a falling tree or a hailstorm damages your car, you’re in an even tougher pickle than if you get hit by an uninsured driver. After all, even if the other driver doesn’t have insurance, you can still sue them. If you’ve filed an uninsured/underinsured motorist claim, your insurance company is undoubtedly going to sue them.
But who can you sue if a tree falls on your car? Mother Nature? God? The local government?
Obviously, there’s no way you’re going to recover money from any of these sources. But thankfully, there’s an easy solution: comprehensive insurance. Comprehensive insurance will also protect you if you’re involved in a single-car accident – for example, if you hit a patch of ice and run off the road.
For more information on different types of insurance policies and what they cover, we’ve written an entire article on the subject.
Can You Fix Your Car Yourself?
In a word, yes. There’s absolutely nothing illegal about fixing your own car, whether or not you’re at fault. This can sometimes be a smart decision. For example, if you get in a minor fender bender that puts a small dent in your bumper, the repair is likely to cost less than your insurance deductible. So not only will you be filing a claim, you’ll effectively be paying out of pocket anyway.
Sometimes, it even makes sense to do the repair yourself if an insurance claim would result in a payout. For example, you may need $800 in repairs, which means that you’d be reimbursed for $300 after paying the $500 deductible. But if the claim would cause your rates to rise, it may be cheaper to simply bite the bullet and pay out of pocket.
Why You Should (Almost) Always Report Your Accident
Keep in mind that filing a claim is not the same as reporting an accident. Filing a claim means that you’re asking your insurance policy to pay for the damage. Reporting an accident is simply that; a report. You’re just notifying your insurer that you were in an accident.
As we mentioned before, failing to report an accident can cause your rates to go up, even if you weren’t at fault. The only reason not to report is in the event of a parking lot accident or act of God, where you have no way of finding the other motorist and don’t expect to get any payment from the claim.
Otherwise, it’s always best to report your accident. For information on how to proceed after that, check out our article on whether or not you should file a claim.