Re: NBC: When to use insurance vs. pay out of pocket?

My wife got into a "fender bender" yesterday where a small dent was left on the other person's car. I'm guessing $1,000 - $1500 for repairs. Does anyone have an opinion on whether to have insurance pay for it and have my monthly payment go up, or offer the guy $1,000?

Call your agent and ask him/her. Then call their competition and get a rate quote. Then decide.

Coupla items:

1 - Car insurance is highly competitive right now and if they do raise your rates, just shop elsewhere and you have a good chance of lowering you payments from what they are now.
2 - This fear of raised rates is an industry scam that the industry has colluded on for years. They all do (did) this to frighten you from filing a claim. Your accident was predicted before you did it and that is what determined your current rate. The insurance companies predict with amazing accuracy what accidents and claims they will have next year, then add on their profit percentage objective, and then back-calculate your rates. They are amazingly good at these predictions and that is why Warren Buffet has invested in in the insurance industry as his backbone for decades. They can't loose (if they are properly managed). Raising your rates after an accident is a scam and when competitive conditions are present, they either won't do it or you can go elsewhere.
3 - Another area where an industry colludes is credit cards. You are their first line of defense against fraud so they want you think you are in some way liable for fraud. I have been mugged, credit cards run up, and it didn't cost me a thing. I also had random/fraudulent charges on my card overseas more than a few times in my lifetime so far and again, no charge or fees to me.
4 - Insurance companies collude in many different ways. For example: high power-to-weight ratios then trigger higher rates. Even if some late-age house-frau (or kept husband) drops in to buy a car and leaves with the HO Taurus model, she now pays sports car rates. My buddy in the insurance industry claims it is not collusion but the result of "independent studies" that show that higher output cars are in more wrecks. This "independent study" crap is done by insurance industry associations that are funded by insurance companies - nod-nod-wink-wink. Ever notice that sometimes they look at the driver and sometimes the car? They choose whichever is in their favor and they all do it. This way they increase their profit margins slightly over the standard predictions.

I am not anti-insurance industry, I just know that companies act in their best interest, and like car salespeople, they have been doing this for over 100 years and they know the little tricks and gimmicks. The only time you have leverage is when the industry gets really competitive and you shop. Like now.

I filed two claims for fender benders on my Porsche and now with my wife on my policy, filed a $15,000 claim on her Lexus. My rates never changed. I have no problem filing.... you or me are not guilty of anything, this is how the system works. Again, they predicted my accidents before I had them.

A big factor for me, is what's your deductible? Was the other person in the car when it happened (potential for additional liablility if claims injury)? What kind of car was it (deminishing value or whatever that thing is called)? Lots of factors come into play to decide if you should call or not. If you do call your agent, find out how long after an accident you have to make a claim. My fear would be that the person takes his/her time getting the repair done, and then starts jerking you around with added costs associated with the incident (not fixed properly, taken back and continued car rental expense, it was more than a dent and the hood/trunklid is now bent, etc). To me, that's why insurance if so nice. You simply hand everything over to them and forget about it, and that's why I have only a $250 deductible. Personally, I've always gone through insurance.

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db997S
A big factor for me, is what's your deductible? Was the other person in the car when it happened (potential for additional liablility if claims injury)? What kind of car was it (deminishing value or whatever that thing is called)? Lots of factors come into play to decide if you should call or not. If you do call your agent, find out how long after an accident you have to make a claim. My fear would be that the person takes his/her time getting the repair done, and then starts jerking you around with added costs associated with the incident (not fixed properly, taken back and continued car rental expense, it was more than a dent and the hood/trunklid is now bent, etc). To me, that's why insurance if so nice. You simply hand everything over to them and forget about it, and that's why I have only a $250 deductible. Personally, I've always gone through insurance.

That's an excellent point--I personally have a $1,000 deductible on my cars because I'm not going to submit a minor claim on my insurance. Also it may depend on the at fault driver's recent history. One's rates may not go up imminently but have a second accident or a ticket, and all of a sudden, you're told something like, "We're not going to cancel you, but when your insurance expires we are choosing not to renew you". And then you're going to a new insurer and they will want to know all at fault accidents (over the past 5 years), tickets, act...and the insurance companies do a very good job these days of logging accidents in central databases, so they will like know about accidents where there were payouts.

And you're correct about the "perils" of paying out of pocket and being prepared for the other guy to "over spend". I've done it both ways. If the other guy's car is fixable for less than $2K, I'm probably paying out of pocket.

Current Porsche: PCA Club Coupe 2 of 50

Past: 02 986 S

01 996 Turbo

00 Millenium Coupe

99 996 C2

99 Boxster

I insure my autos big time because, if there is a claim, I want there to be no question that I am entitled to full coverage from the insurance company.

Thus I am super careful to fully disclose, report everything, give honest estimates of miles per year, cost of cars, etc.

Suppose the worst happens, would I want to have to pay millions to have saved $1k? Not me.

Insured with the same company for 40 years. Largest claim: $28k. Shortest time between accidents: 8 months after the big one. Reported both even though the second one was completely the other gal's fault (I was stopped at a light behind 6 cars).

I took risks with my IMS because I could afford to pay in the worst case. I take risks on the stock market even though I'm 68. I don't with my auto insurance. I'd rather my rates go up if they have to.

In MA, if you are deemed 50% or more at fault for an accident, points are added to your license. The number of points depends on the value of the damage. Then the insurance company raises rates based on the number of points on your license. The additional cost can be $300 or more per year for 6 years.

Based on the regulations for your state, you should calculate the total cost to you for the two options before making a decision.

I would also check your contract with your insurance company to make sure you haven't agreed to do or not do certain things in the event of an accident.

But the paid was in the bad old days where everything wasn't linked and where I could be sure the insurance company wasn't going to learn of my involvement. Once collected cash three times for the same fender within a month. But that was 50 years ago.

Look at your insurance policy and see if they can not accept the claim if it isn't reported within a certain time period.

When I totaled my Porsche, my rates didn't go up but I did lose my good driver discount for several years..just noticed I got it back on my last bill. That did cost me $ over several years.

Thanks everyone for your great responses. I live in CA. My deductible is $500. Below is a pic of the dent. I'm thinking of just offering the guy $500 cash and if he wants more let my insurance take care of it. Edit: the car is a late model Toyota pick-up.



[i51.tinypic.com]



Edited 1 time(s). Last edit at 07/20/2011 09:31PM by boxsterd. (view changes)

I'd want if fixed and fixed right and why should I take the risk that $500 would cover it.

Yeah, looks like he has the brush grill cover (which may also be dinged up a bit) and all the bells and whistles. Now, if it was already a somewhat beater of a pickem up truck, that might be a different story. My guess is, that unless he's hurting for cash, he'd want it fixed right.

Good luck on the offer.

We had another "fender bender" about 10 months ago (this time my fault). My fear is the insurance company is going to see a trend and raise rates. After all you said the rate is based on the insurance company's predictions of future accidents.

each state is different and in NY for example an at fault accident with less than $2,000 in total damages is not surchargeable. here the policies run in 3 year cycles and you can be dropped if your number of claims and accidents within that period is trending badly. i can't wholly agree with Bruce in Philly as here in NY it is (as in most states) highly regulated by the State. When to surcharge etcetera is clearly defined. That said you may still get a better rate , even with an accident charged to you, if the balance of your record is good and your credit is as well.

if it is a single car incident, ie you back into a tree or stanchion or a parked unoccupied car, you are in a better decision to make a claim. i would save the insurance for something bigger. talk to your agent.

So here's the latest...get this...I called the guy up ready to make my offer of paying him $500 cash or taking it to my insurance company if he wanted more, and he said forget about it! He said he's a Chrisitian, and said, and I quote, "Jesus paid for it 2000 years ago." I don't know what to think. It's very strange. Does anyone know of any scams that goes like my story or if there are any "gotchas" I should watch out for?

about 10 years ago, my wife was backing out of our driveway and hit a realtor's car parked on the street holding an open house. She went in, told the realtor and gave her our insurance company information. She put a nice dent in the fender. The realtor never contacted our insurance company.

Strange things happen. On the plus side, the longer this dude waits to do anything about this, the less likey you may be on the hook. Who's to say that whatever he claims a month from now didn't happen from some other event?

1) He may be intending to pursue legal action. After a (state-dependent) time limit, your lack of claiming it may put you in a precarious legal position
2) Your conscience may tell you this is not fair to him