Out of Pocket Settlement Vs Insurance?

[desidude]

Hi everyone,

I have an at-fault accident a few days back where a car was stopped at the stop light and I thought I had enough room to get to the lane on the side but alas I did not....No police report was filed, the guy was pretty decent and agreed to get an estimate for out of pocket. I gave him the option that if out of pocket seems a lot then we can even go through the insurance route.

We discussed getting this settled out of pocket, pay directly to the shop. The guy who got hit sent me a detailed estimate of $1900 from a local shop with decent reputation. I am going to get an estimate from another shop as well to get a better idea.

So here is some info about me: State Farm policy holder for around 8-9 years, No at-fault accidents claimed in the past. Deductible is $500.

Question:

If we went the insurance route, I am currently paying around $130/month for both my cars, how much would this kick us up in premium? How bad is it? I am just worried if something else happened in the next few years which is more $$$ to fix out of pocket, then our premium will get jacked up even more? We are usually both safe, cautious drivers but accidents do happen.

Also wondering if it is worth settling out of pocket or not worth the headache of going back and forth (and getting a form signed that this is full and final payment etc?)

Thanks for your advice

 

[Josh]

Hi everyone,

I have an at-fault accident a few days back where a car was stopped at the stop light and I thought I had enough room to get to the lane on the side but alas I did not....No police report was filed, the guy was pretty decent and agreed to get an estimate for out of pocket. I gave him the option that if out of pocket seems a lot then we can even go through the insurance route.

We discussed getting this settled out of pocket, pay directly to the shop. The guy who got hit sent me a detailed estimate of $1900 from a local shop with decent reputation. I am going to get an estimate from another shop as well to get a better idea.

So here is some info about me: State Farm policy holder for around 8-9 years, No at-fault accidents claimed in the past. Deductible is $500.

Question:

If we went the insurance route, I am currently paying around $130/month for both my cars, how much would this kick us up in premium? How bad is it? I am just worried if something else happened in the next few years which is more $$$ to fix out of pocket, then our premium will get jacked up even more? We are usually both safe, cautious drivers but accidents do happen.

Also wondering if it is worth settling out of pocket or not worth the headache of going back and forth (and getting a form signed that this is full and final payment etc?)

Thanks for your advice

It's liability so the deductible would only apply to the repair on your vehicle, none with his. Even if state farm raise your rate, it's tough to think it would be drastic enough and long enough to be worth the cost of his repairs and what I assume is some damage to your vehicle. There is also nothing to say they won't come back later looking for more money. If your rate goes up, you can always shop around.

If it were me, I'd give him my insurance info and make the claim. It's probably on the edge now, but the shop usually finds more damage and this way you're not risking it.

 

[djs]

Look at it the other way around, if you are paying $130 a month now, even a 50% increase (unlikely to be this much, but lets say it is) for 3 years, the most you would pay likely is:

65*36=2340

Now, you won't pay this higher rate for 36 months, unless timing is exactly right and you probably won't have a 50% increase, so I would definitely do it through your insurance rather than paying directly.

Also, if you have collision insurance, you can get your car fixed for the cost of your deductible, so its much better to go for the insurance.

And, just to top it off, chances are, you'll end up paying for a rental car for him while his car is being worked on. Probably 3 days or so, but it will add another $100 or so to the bill.

Dan

 

[blue_wynd]

What they said. For $1900 plus your own car damages, it makes more math sense to go through the insurer. Considering the length of time you are with State Farm with no accidents, you may qualify for the accident forgiveness. Believe they have one.

 

[desidude]

Wow, such good advice. Thanks everyone for this, quite useful!

As for the damage on my own car, it was effectively just the side mirror which scraped through and did all the damage. I looked at it, the mirror itself is fine, the outside part of it is scraped up.

Technically I could live with it, it is minor cosmetic damage on my side mirror, but if I am going through the insurance route then is there any added benefit or a negative of repairing this? I would rather avoid it if there is some threshold that they use to calculate premium raise and if repairing this makes me hit that threshold then probably not worth it?

Again, this is assuming there is a magical threshold beyond which they'll bump up my premium? (Apologies if these questions sound dumb, I am quite a rookie in this area thus far)

Thanks again!

 

[blue_wynd]

In my state it is $1550 or more in an accident before they surcharge you. You will need to talk to your agent for your state or go google it. Also, talk to your agent, see if you qualify for their accident forgiveness. This is the great part of having an agent you can talk and go over your options; not some 800 number where they may mark your files when you start asking questions.

 

[djs]

Yeah, the 'magical' threshold is a number you have already crossed in most states if not all (it does vary by state and is usually set by the state, not the insurance company).

Don't let those mirrors fool you. You used to be able to buy them at the auto parts store for $29. The last side mirror claim I had was almost $3000. The electronics, painting, etc, add up quickly! Yes, this one claim was extreme, but it is amazing how fast those claims grow.

If it didn't break the mirror or snap it off, then you may be below your deductible anyway. May not make a difference, but, its worth having it looked at.

Dan

 

[desidude]

In my state it is $1550 or more in an accident before they surcharge you. You will need to talk to your agent for your state or go google it. Also, talk to your agent, see if you qualify for their accident forgiveness.

That's the thing I fear is if they'll automagically add something to my account if I ask these questions? I regret not having asked them when I didn't need any of this...

 

[Josh]

That's the thing I fear is if they'll automagically add something to my account if I ask these questions? I regret not having asked them when I didn't need any of this...

Ask another state farm agent in your state.

 

[desidude]

----------

Look at it the other way around, if you are paying $130 a month now, even a 50% increase (unlikely to be this much, but lets say it is) for 3 years, the most you would pay likely is:

65*36=2340

Now, you won't pay this higher rate for 36 months, unless timing is exactly right and you probably won't have a 50% increase, so I would definitely do it through your insurance rather than paying directly.

Also, if you have collision insurance, you can get your car fixed for the cost of your deductible, so its much better to go for the insurance.

And, just to top it off, chances are, you'll end up paying for a rental car for him while his car is being worked on. Probably 3 days or so, but it will add another $100 or so to the bill.

Dan

Dan,

After calling a few local agents, turns out that the threshold is 1000-1250 and that the premium goes up 30-40% thereafter and sticks on your record for 6 years, going down a few % each year.

Based on a $130 premium, I am guessing it'll go up to 170-180$ and that'll end up being around $480 premium increase for the first year and over 6 years that'll probably come to around 1800-2000$ (and if heavens forbid something else goes down in between then the premium will get jacked up even more)

There is no accidental forgiveness in California so that won't help :(

Now, based on the estimate I got for around 1700$ total including rental, I am contemplating out of pocket vs insurance all over again :(

Based on these updated numbers, would you or others change their advice or do you think going through insurance is still a good idea?

Thanks !