OK, hypothetically let’s say I have a “friend” who was backing out of a parking space and bumped the fender of another car. Should this “friend” report the incident to his or her insurance company, or pay the other person out of pocket?
Depends on how deep your(oops, your ‘friends’) pockets are and how often you have tapped your insurance company for claims.
The official line of the insurance companies is that you have to report every accident, no matter how small. Some even want you to call the police.
That said, I have been in a similar situation and been able to talk to people at my insurance company (that shares its name with a turn-of-the-century political party) about the pros and cons of reporting a particular accident. They even let me talk to the underwriting department, who told me exactly how much my rates would change.
Have the person get an estimate-- you’ll be amazed at how much minor body damage costs on new cars-- and then you can try and get an estimate from your insurance agent as to how much your rates will increase. It will go up a percentage, so if your rates are low now, it may end up being an insignificant dollar amount, whereas if you’re young and have higher rates it could make more sense to pay out of pocket.
In my situation, the minor accident caused about $1000 dollars worth of damage and would have increased my premiums a total of $300 over the five years the accident would be on my record, so I went ahead and made the claim.
Er… the above is what I would tell your “friend” of course.
I will also add that if you do end up paying the person off, if they’re unscrupulous and have your insurance information, there’s nothing to stop them from pocketing your money and then making a claim.
A small amount I would just pay. Not worth the trouble.
Note: The full answer will depend on the amount of damage, what state you are in, what insurance company you have and your past history.