Avoid Auto Insurance Claims to Keep Rates Down
You are in the parking lot and another car lightly bumps your bumper. There is a dent, or maybe the back light is cracked. The question is – do you tell your auto insurance company? The answer is that it is probably best if you didn't mention it to anyone.
When you took your first driving class back in high school, you were taught to be honest and leave a note on the car if you can't locate the driver of a car you hit, and most certainly call your auto insurance company if anything happens to your car. In a perfect world, this is the right thing to do, but many auto insurance companies have made it almost easier for you to avoid using their service than to call them up for the very help you are paying for.
Small Issues
A ding or a scratch, a dent or a scrape can usually be rectified at the local body shop for less than a few hundred dollars. If, however, you decide to tell your auto insurance company about your little mishap, you could be paying that hundred dollars several times over, every year, for the next few years. A small scratch repair could, in fact, cost you several thousand dollars in increased insurance rates. And, that is regardless of whether or not it was your fault.
Most people carry substantial deductibles on their auto insurance, meaning that the smallest auto insurance claims would come under the deductible threshold. Say, for instance, small fender-bender results in $200 worth of auto body work. If your deductible is $500 (which is not unusual), then the auto insurance company would not contribute a single penny if you report the incident.
Larger Issues
When something really bad happens to your auto, like violence (a shredded top on your convertible), a bad accident, or damage as a result of natural forces (hurricane, fire, etc.) in Michigan, then you really do have to contact your auto insurance company. Even with a larger deductible, you will still need help getting your car fixed. Should the worst happen and your car is destroyed, then that is when auto insurance really pays for itself.
Long Term Effects
The long term effects of any claim on your auto insurance policy can be very costly. Many companies do not differentiate between a small claim caused by someone else and a major claim involving injuries and serious damage to the car or other property. It seems unfair, and it really is, but that is the way auto insurance companies work.
Remember that any accident or incident involving injury or serious damage to a car absolutely has to be reported to both your auto insurance company and the authorities, so never try to cover up a real incident for the sake of saving a few dollars on your next insurance payment.