Everything You Need to Know About Insurance

By Josh Garskof

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Car crash
Photo by Age Fotostock/Superstock

Question #3

I was at fault in a minor fender bender. My car is fine but repairs on the other guy's will cost about $600. Should I pay for it out of pocket or file a claim with my insurance company?

If you cut the check yourself you're out $600, end of story. Yes, the other driver might suddenly decide to hike his repair costs or start complaining of whiplash, but you can bring your insurance company into the picture if and when that happens. If you file a claim, on the other hand, you're still out your deductible, which is probably $250 or $500 -- even $1,000 (in which case you'll spend the full $600 anyway). And because you're at fault, your insurer will likely hike your rates by 10 percent -- maybe by 50 percent if this is your second recent at-fault accident, says Hunter. Those rates won't drop back down for another three years.

So do yourself a favor and pay out of pocket for the crunched bumper and save your insurance for big claims that would bust your bank account. "You have no obligation even to mention the incident to your agent -- and you shouldn't," says Hunter. Even though you're not filing a claim, the company still might raise your rates if it finds out you caused an accident.

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