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My wife recently side swiped a building with our car. We know the building owners and they don't seem to be worried about any damage. A friend in the car body work business suggested it would be ~$1200 to get the car damage fixed. We have collision and comprehensive insurance with a $500 deductible.

My question is, how can I estimate whether or not it's cheaper in the long run to file a claim with the insurance or just pay out of pocket for the repairs?

We haven't had any claims in the last 5 years and our car insurances rates recently dropped quite a bit. I'm worried about jeopardizing that.

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    If you bump to $1000 deductible, your premiums will be lower and the choice between that and out of pocket is easier ;-) – AbraCadaver Jan 31 '17 at 19:39
  • Likewise, if the car damage is just cosmetic, it's much cheaper not to fix it. – jamesqf Jan 31 '17 at 20:09
  • Call the ins company and ask how your rates would be impacted as a hypothetical question. I've done this. We ended up filing because the many months of increased premiums was actually cheaper than paying out of pocket. They can't raise your rates over a simple question and no claim. You can always change companies later and get some kind of token change discount, too. – acpilot Feb 1 '17 at 6:01
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There's not a single answer here, as the premium you pay for car insurance depends on multiple factors, including (but not limited to):

  • driving record
  • Demographics (gender, age, etc.)
  • type of car (sports car, sedan, SUV, etc.)
  • Driving habits (how long, how often)
  • Amount of deductible

All these factors contribute to the likelihood of getting into an accident, and the expected damage from an accident.

So just having an accident and making a claim will likely raise your premium (all else being equal), but whether or not it will be cheaper in the long run depends (obviously) on how much your premium goes up, which cannot determined without all of the facts. Your agent could tell you how much it would go up, but even making such an inquiry would likely be noted on your insurance record, and may cause your premium to go up (although probably not by as much).

However, the point of insurance is to reduce the out-of-pocket expenses from future accidents, so the question to ask is: How likely am I to have another accident, and if I do, can I pay cash for it or will I need to offset some cost with an insurance claim. Do you risk making a claim and having your rates go up by more than $700 over the next 3-4 years (the rough time it takes for a "surcharge" to expire)? Or do you just pay for the repair out-of-pocket and keep your premiums lower?

  • Can you explain the last paragraph a little more? For example, If I am more likely to have an accident in the near future, how would that bias me toward or against making the claim on my current incident? – pauld Feb 1 '17 at 16:35
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    It doesn't directly - the decision point (as your question asks) is will your premium go up more than $700 over the next few years. I was more illustrating that the point of insurance is not to "come out ahead" but to protect against catastrophic loss. The price you should be willing to pay for insurance should be based on how much loss you can absorb and the risk of a greater loss. So if you can afford a higher deductible then the lower cost of insurance generally makes it a better deal if you are not likely to have a claim. – D Stanley Feb 1 '17 at 17:37

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