When and whether you should or should not is up for debate but here are some of the facts about filing a claim with your car insurance company
What We Don't Know
Here at Auto Credit Express, we don't claim (pun intended) to be experts on auto insurance. But since every single borrower with bad credit must carry at least the state minimum full coverage car insurance, we thought we'd present information we've gathered on when and whether to file a claim with an auto insurer.
Filing an Auto Insurance Claim
Car insurance is an especially sensitive issue with many of the people we help find bad credit auto loans. For one, many of them are on tight budgets - making the cost of full coverage auto insurance especially difficult. Secondly, in many states auto insurers can base premiums, at least in part, on the driver's FICO scores, which makes carrying this type of policy even more expensive with problem credit - at least until these borrowers can raise their scores.
So if these drivers are in an accident, what should they do?
After some research, here is what we've found: ask five car insurance experts and you're likely to get five different answers concerning when to file an auto insurance claim. But we did manage to come up with a common thread:
- If you're involved in a major accident with damages in the tens of thousands of dollars, you should always file a claim.
- Even if you don't file a claim, you should report an accident to your insurance company – especially if it involved another person and/or vehicle. If it's not reported during the allotted time specified in your contract, the insurance company has the right to deny a future claim and you will be personally responsible for any damages as the result of any claims against you.
- If the claim pays out little more than the deductible, you might not want to bother filing a claim because doing so could very well result in a rate increase (a single at-fault claim could translate to a 38 percent increase in annual car insurance premiums). Whether or not you decide to do this and how much above the deductible you're willing to go is up to you. One example: if the deductible is $500, most experts recommend not filing if the damage is anywhere from $1,000 to $2,000. Obviously not everyone can afford to do this. According to Insurance.com managing editor Des Toups, "Insurance is meant to ward off financial disaster. If the only way to get to work is to file a claim, so be it. But don't file just because you can."
- If a claim is not the result of a moving violation and falls under comprehensive coverage – such as theft, hail damage or a broken windshield – filing a single claim typically results in a slight 2 percent rate increase. It's worth noting that insurance companies raise rates on these types of claims more modestly that either bodily injury or liability.
The Bottom Line
Since insurance can be particularly expensive for credit-challenged borrowers, these consumers need to carefully weigh whether or not they should file a claim with their car insurance carrier – especially if the damage is only a few hundred dollars above the deductible amount.
One more tip: Auto Credit Express specializes in matching applicants with credit issues to dealers that deal with poor credit and can offer them their best opportunities for auto loan approvals.
So if you're ready to begin the process, you can start by filling out our online auto loan application.