Should you report that fender-bender?
(Illustration: Harry Campbell)
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Fear of an insurance rate hike is often the concern behind that question. But there are some important factors to weigh as you determine your best course of action.
When to report it
Seven in 10 auto accidents in 2011 involved another vehicle, according to Department of Transportation data, as did 52 percent of car insurance claims filed in recent years by more than 31,000 Consumer Reports subscribers surveyed last summer. If your mishap falls in that category, always report it, especially if you may have been at fault, because your coverage also protects you against liability for harming others.
Your insurance company and some state laws might require you to report in such cases (ask your insurance agent about the policy and state requirements). But officially documenting the facts is also in your own best interests whenever you’re involved with a stranger in a potential damage claim situation—even if you and another reasonable person work out a private arrangement to keep the insurance companies out of it.
“I’ve seen very few of these personal deals work out in my 2 7 years with Progressive,” says Rick Sticca, claims general manager at the fourth-largest auto insurer. Repairs often cost more than reasonable people anticipate. For example, when a 2010 Toyota Corolla rear-ended a 2010 Toyota RAV4 at 10 mph in testing by the Insurance Institute for Highway Safety, the Corolla had more than $3,800 in front-end damage and the SUV incurred more than $6,000 in rear damage, because of the vehicles’ bumper-height mismatch.
The Corolla’s damage looked minor, and the RAV4’s was almost imperceptible. Even the cheapest damage in 14 such trials involving seven vehicle pairings produced almost $3,000 in total losses—six times the typical $500 collision deductible.
Even the lack of immediate injury can be deceiving. The adrenaline rush accompanying even a low-impact crash can mask injury symptoms, and soft-tissue damage can take 24 to 48 hours to show up. Bogus injury claims are another possibility worth considering and can result from staged accidents and other fraud, according to the National Insurance Crime Bureau.
If you don’t report and big costs surprise you later, your insurance company might not pay because its ability to investigate the claimed damage, when time was of the essence, has been lost.
When it’s a toss-up
Your toughest decision-making challenge comes when the damage is to your own vehicle and property. Filing a claim would probably produce a tempting payout of several hundred to more than $1,000, after the deductible. You must consider an unknown “x” factor of how your claim might impact your premiums. Unfortunately, it’s impossible for consumers to know in advance how much their premiums will increase, and for how long, to weigh that against a claim payout. But among our subscribers, 7 percent of claimants felt that their insurer unfairly raised their premium as a result of their claim. (We didn’t ask about fair premium increases.)