Should You Pay Out of Pocket or File a Claim?

Auto Body, Auto Repair on June 5, 2018

Let’s say you were involved in a minor accident – nothing serious, perhaps you bumped into a pole or had a minor parking lot hit. Should you file a claim with your car insurance company for a minor fender-bender? Or, would it be a better idea to pay out of the pocket?

Filing an insurance claim makes sense when you’ve been involved in a major accident where you’ve been injured and require medical coverage, and/or the vehicle has suffered substantial damage.

However, in many other less serious cases, it may be better to avoid filing a claim. Every time you file a claim, it can lead to higher insurance rates, and in extreme cases, even an outright cancellation of your insurance policy.

Paying for damages out of the pocket could actually save you money in the long run. Let’s look at the pros and cons of whether you should pay out of pocket or file a claim with your insurance company

When to File a Claim for a Minor Car Accident

In some situations, filing an insurance claim is required by law, even if it is only a minor accident. There are factors to be taken into account such as your deductible, the severity of the accident, whether there are any injuries, and claim history.

Filing a Claim

#1: The cost of the claim is much higher than the deductible. In that case, it makes sense to file the claim. Let’s say you have a deductible of $500 and have had an accident that has cost you $4000 in damages. Clearly, filing a claim for $4000 and paying $500 as a deductible is a better option than paying $4000 out of the pocket.

Yes, your insurance premiums may very well go up after this, but not by much if you have a good driving record and low accident history. As long as you are not in another accident soon after, your risk of drastically higher rates is low.

#2: There are other drivers involved. If your accident involves other vehicles, then filing a claim might be necessary. This is especially true if you have caused any damages to other vehicles or people.

So if you have been involved in a fender-bender, you can file the claim and let the insurance provider handle the liability and injuries. Or, you can pay for the damages yourself, which means you’re basically at the mercy of the other driver. In this case, it becomes possible for them to inflate the cost of the damages, or to threaten to file a personal injury lawsuit and ask for more money later. Always proceed with caution when others are involved.

#3: Your insurance plan includes accident forgiveness. In that case, you can file a claim without worrying about an increase in the premium.

Paying Out of Pocket

#1: You’ve already filed a claim recently – You were involved in an accident only a few months back and filed a claim for that. Now, if you file a claim again after a minor car accident, the insurance provider will have every right to raise your premiums.  Instead of filing multiple claims within a short period, it’s better to pay out of the pocket if you are able.

#2: There is no other car involved – Let’s say you hit a tree or another stationary object and there are no other cars involved. If the cost of the repair is fairly low, lower than the car insurance policy deductible, then you should definitely pay out of the pocket.

#3: It’s just a minor fender-bender – If it’s just a minor accident such as a dent, scratch or broken tail light, then maybe you don’t need to file a claim. Just pay out of the pocket.


Make sure to follow the law whenever you are involved in an accident. You cannot, for instance, leave the scene of the accident if others are involved. Any serious accident that involves other people must be reported. Check the Arizona DMV website for the details on this.