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When Not to File an Auto Insurance Claim

If there are two or more parties involved in the accident

There are certain times when not filing a claim makes sense.

If you can successfully negotiate damages on your own, and come to an agreement (in writing), then you can probably take care of the situation on your own.

The most important thing to get from the other party is a release of any and all claims against you (the policyholder, the driver, and the owner of the car) - all claims including and not limited to “bodily injury claims”.

You need to secure the release for injuries; otherwise the other party will always have a potential claim against you (even if you are only dealing with a bumper).

You need to do this even if the other party does not appear to be injured or have ever claimed to be injured.

If you are able to get this document signed (from every legal adult in the vehicle), then you have protected yourself from any frivolous lawsuit.

However, not notifying your insurance company can bring you a bigger headache later on.

If you fail to notify the insurance company that a loss occurred, you are probably breaching the terms of the auto policy (duty to report losses).

By reporting the claim, your insurance company will be required to provide coverage for your defense (hire an attorney), even if the lawsuit is frivolous.

If you are wondering if you should file a claim and there are two or more vehicles involved, then the answer really is - you should always notify the insurance company. “Notify” does not mean “file a claim”.

You could tell them that you would take care of damages yourself, but if things get ugly then you could always call back. This will at least ensure future coverage in case of a lawsuit.  

It is understandable that you want to keep your insurance payment low. However, not filing in time could put you in a bad spot.

Having the insurance company provide an attorney if you need one (if there is a lawsuit against you) will end up saving you a lot more than the increase on premium.

Do not try to save on this one. It could cost you much more at the end.

You can always ask your agent if is more advantageous for you to pay out of your own pocket. However, be wary of the answer an agent gives you.

Agents want to discourage you from filing claims (the more claims their clients file, the less bonuses they get). The agent has a vested interest on discouraging you from filing the claim.

Determining fault is not the agent’s job. It is the claim adjuster that must determine that. Do not be fooled by that.

If the adjuster thinks that you are 10% at fault, then that is the amount of negligence that will be attributed to you regardless of what the agent thinks.  Better be safe than sorry.

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