When Is It Smart to Pay for Car Damage Out of Pocket?

Ana Scott | February 13th, 2020

When Is It Smart to Pay for Car Damage Out of Pocket?

There are plenty of times when an auto accident means you should file an insurance claim, particularly if the costs will be very high. But there are times when it might be more convenient, both in terms of paperwork and costs, to just pay for any repair costs out of pocket. Let’s go over how to determine when it’s smarter to pay for car damage out-of-pocket.

When You Should File an Insurance Claim

In most cases, it’s obvious when the right course of action is to file an insurance claim rather than pay out-of-pocket. For starters, any car accident that involves other vehicles or people should result in you filing an insurance claim. Doing this protects you from any potential excessive charges or costs, especially since you and the other driver or person involved in the accident don’t have all the information or objective views on the damage.

Filing an insurance claim right away protects you from your carrier saying that you delayed filing the claim until it was too late. It also protects you in case the other person involved in the accident from suing you, either rightfully or maliciously.

When You Should Pay Out of Pocket

There are many other times, however, when it’s smarter to pay for car accident damages out-of-pocket.

You’re the Only One Affected

If there’s no other person or vehicle involved in your car accident – such as an instance when you back your car into your own fence – it’ll often be easier to just pay for the damage and repairs yourself instead of filing for insurance.

Repairs Are Less than Your Deductible

Furthermore, many minor damages result in repair costs that are less than your deductible amount. For instance, a fender bender against your own fence might only cost you a few hundred dollars’ worth of repairs. If your insurance deductible is much higher, such as around $1000, then it’s obviously much better to just repair the damage yourself rather than pay $1000 to have your insurance company then pay you a few hundred dollars for repairs.

Accident Forgiveness

Additionally, many insurance providers have an “accident forgiveness” policy, which essentially saves you from being penalized from an increase to your premium rate for your first insurance claim. This is nice, but it’s a little wasted on something where you did the damage yourself, you were at fault, and the damages were relatively minor. Taking care of the repairs yourself rather than filing a claim can save this “freebie” for a time when you may actually need it.

Prevent Your Rate from Increasing

If the costs for repair are relatively low, it might be worthwhile to avoid filing an insurance claim (and thus increasing your premium rate each month) and paying out-of-pocket if you have a little cash saved up. This may even cost more initially, but it could save you more over the next year of monthly premiums because of the rate uptick you would suffer as a result of your little accident.

Keep Your Record Clean

Finally, many insurance carriers keep track of the number of accidents or issues that drivers have over several years. If you’re trying to clean your record after an accident a few years ago, it might be smarter to pay out-of-pocket and not file an insurance claim to keep your record spotless. This is particularly applicable if you are very close to getting a safe driver discount for your monthly premiums.


In the end, you’ll have to use your best judgment when it comes to determining whether you should file a claim or pay for car accident costs out-of-pocket. However, don’t always jump to file a claim, as there are plenty of situations where there is a better move. Good luck!

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