Should I make a car insurance claim or just pay cash for repairs?

You know the phrase the house always wins? That’s kinda how it feels with car insurance. Sure, if you had a fender bender, a good policy can be like winning the jackpot. With a click of your fingers, your totaled car is replaced with a new one. But for other insurance claims, it can feel like you’re just paying out the wazoo with an unreliable car to show for it.

That’s especially so when it comes to smaller claims. The auto insurance industry has mastered its own profitability models. They’re the ones that get to determine how much a claim is worth, and they work hard to put you off making a claim in the first place with deductibles, coverage limits, and the threat of premium increases.

If you make too many claims they might cancel your coverage—or even drop you as a customer altogether.

Thing is, car insurance is something you can’t drive without. Unless you live in New Hampshire or Virginia, it’s a legal requirement.

This means it’s down to you as the policyholder to figure out how to make the system work in your best interests. It helps to be clued up on how car insurance works. It helps to drive safely. And it really helps to have a calculator. Here’s a quick checklist to figure out if you should make a car insurance claim. Warning…basic math incoming!

are the repairs worth more than my deductible?

Your auto insurance deductible is the amount of money you need to pay out of pocket towards any repair costs. This is usually between $500-$1000. If your repairs will cost less than this, then it doesn’t make sense to make a claim. Easy as pie.

is the cost of repair enough to total my car?

If the cost of repairs are higher than what the insurers deem to be its total value, then your car will be considered “totaled”. This means instead of paying for it to be fixed, the insurer will take ownership of the car and pay out compensation instead. In some cases you could buy back the car and pay for repairs yourself.

have you made more than 1 claim in the last 3 years?

If you’ve already made two claims recently then a third could put you at risk of not being renewed. It may be economical to swallow the cost of repairs this time so you can continue with your insurance policy in the long term.

can you afford a rate hike?

If your insurance premiums are already at the top of your budget then you need to think very carefully before making a claim that could result in a rate increase. Even if the repairs cost more than your deductible, is it worth the potential hike on your rates? You might save a couple of hundred dollars in the short term, but when you come to renew your policy it could result in higher long term monthly payments that outweigh the benefit.

If you’ve spoken to your agent and the outlook is not looking good for your car (or your bank balance) then it might be time to scrap making a claim (and scrap your car with it). Here at Peddle you can cash in your junk car—whether it’s roadworthy or doomed for the junkyard. Just tell us the deets and we’ll make you an offer in minutes. So instead of paying out to your insurance company, you can get a brand new car instead.