I’m just a little ol’ SOA actuary and don’t know anything about car insurance. Are there are good rules of thumb about when and when not to involve the insurance company when repairing your car?
I posted this in the random questions thread but thought maybe it’s better in it’s own: My FIL was backing out of the garage and scraped a wall and his bumper fell off. Is he better of paying out of pocket (~2k) for repairs or going through insurance? Like when and by how much to companies raise rates for this sort of stuff? He also wants to know if they raise his rates can he switch to a different provider who would then offer him lower rates (I feel like they have good underwriters that know those things right?)?
I don’t know, but am interested in this as well.
If you have accident forgiveness, and it’s a decent claim, and your claim frequency is low, just report it.
Depending on your state, companies can only use claims from a certain timeframe for ratemaking. So one claim every 5 years is a good rule of thumb to report.
In Delaware it might even be 3.
Agreed mostly with @John.S.Mill. You can always ask your agent (who is more likely to be right than wrong) if you have some kind of accident forgiveness.
Also depends on your deductible though, if it’s a $600 repair on a $500 deductible I wouldn’t report. Even if you do have accident forgiveness you’d waive that for your next one.
I research rate filings before writing with a company
Best answer is to talk to your insurance agent/broker about it.
But some things to consider in deciding to start this conversation is to consider the following:
- Will your policy cover it? In the scenario described, do you have Collision coverage on the auto?
- What OOP expenses are you going to incur anyway? In the scenario mentioned, what’s the deductible and how does the total expected costs compare with that?
- You can always change companies/carriers. Just notify the current company that you’re terminating the policy. Note that you’ll want to secure the new coverage first, and that switching companies may result in other undesired consequences (e.g., worse claims experience if you really do have a “bigger” accident). Just note that any claim you file with one insurance company is going to also show up for just about every other carrier as well.
Perhaps a rule of thumb for considering the cost differential (paying OOP vs. higher rates): calculate what 10% of current premium would be for three years* (plus deductible) and compare that to the total expected costs OOP.
* This amount takes into account the potential for a lost discount (for being claim free) along with potential surcharges for having the claim. Also, most states limit the number of years a company can use for claims in rate adjustments. Some states allow for longer time (e.g., 5 years), some states also restrict what claims are allowed to be used. But much of that is going to be too complex for making an "initial decision".
@Vorian_Atreides has it pretty nailed down so I won’t add my spiel. But in general your agent should be able to quote you with the additional accident and give an exact figure (if any change) and how long any increased payment would take place. If you have a prior accident history, there may be concern about other actions taken from an underwriting perspective, but usually your agent should have a decent idea about what that might be as well.
using insurance agents for something as unsophisticated as car insurance seems…antiquated.
It helps when they’re like, “Uh I don’t think we have (Discount X)” and I ask, “Could you check again? It looks like it was new just a few months ago.” After a few minutes on hold they come back and, “Yeah, I guess we do have that, that’ll lower your premiums by $30/month.”
Sounds right up my FIL’s alley! (the antiquated part, not the unsophisticated part…)
You and I have had very different career experiences I expect (we’re an antiquated company as a whole).
What’s wrong with “antiquated”?
An extremely unhelpful comment . . . the kind that has the potential to lead to a disaster of Titanic proportions.