1. Not every claim affects your rates.
In the interest of full disclosure, I need to be clear that I am an adjuster, not an underwriter. And even if I were an underwriter, the rules differ from company to company and from state to state.
However, in general, if you were not at fault for an accident, your rates are usually not affected. In general, if you were at fault for an accident — partially or totally — your ratesmay not be affected if the total payout is under a certain threshold.
If you have a local agent, he or she may be able to tell you more about the underwriting rules and how your claim may affect your rates — although many agents won’t have that information readily available and will need to research it.
And of course, there are many other variables that go into your rates; just because your accident was not-at-fault and/or low-payout doesn’t mean that your rates won’t go up — just that the rate increase may not be related to any accident.
2. Paying out of pocket can be a slippery slope.
Every week or so, I get someone who asks if they can pay for the other party’s damages out of pocket instead of having us pay the claim. The answer: you can, but it’s probably not a great idea.
You may get an estimate from the other party — but it’s just that. An estimate. It’s likely that when the vehicle gets torn down, additional damage will be found, and the other party will come back to you for additional payment. Plus, they will probably want to rent a vehicle to take the place of theirs while it’s in the shop — which could also be your expense.
When your insurance company issues a payment for auto damage sustained in an accident, it is very seldom a “full and final” payment. I’ve had claims that had an estimate for under $600 that ended up with over $3200 in payment by the time everything was done. That’s a risk you’re putting on yourself if you choose to pay out of pocket.
3. Paying out of pocket doesn’t usually save you money.
When most people pay out of pocket, it’s because they don’t want their rates to go up. But when you look at the amount rates usually go up compared to the amount you pay out of pocket for an accident, it’s usually costing you more money than it saves you.
With most major auto insurance companies, an accident will only affect your rates for three years. Using completely legitimate numbers that I am one hundred percent making up out of thin air, let’s say that the amount you would have to pay out of pocket ends up running to $2400.00. Over the course of 36 months, the rates you avoided would have to have been affected by as much as $66.67 per month for you to just break even. Think about what your rates are now; the odds of your rates going up that much are really low. And if the total out of pocket expense is low — say, $240.00 — then your rates probably wouldn’t have been affected anyway.
4. Your adjuster really does need to speak with you, even if you’ve told your story already.
Many local agents provide all sorts of services, such as letting you report claims directly to them. The trouble is, the majority of agents are not trained in adjusting claims.
It’s not at all unusual for the claim report to end up like a game of “Telephone.” You tell your agent what happened, your agent tells a claims customer service representative what happened, the customer service rep fills in a form that tells the adjuster what happened…. By the time it gets to the adjuster, your twenty-minute conversation with your agent in which you explained exactly how the other driver ran a stop sign and made a left turn in front of you and you swerved but you couldn’t swerve too far because there was a troop of Girl Scouts and an orphaned sea otter in the way… yeah, that gets to the adjuster with an entry that says “Insured and claimant collided in intersection.”
In fact, sometimes even reporting your claim directly to your company may not be enough to prevent you from telling your story more than once. If you’re reporting the claim directly, feel free to ask if the person taking the claim is an adjuster; if not, ask them how much detail they want.
5. Michigan is insane.
Michigan is the only state in the USA that handles claims the way it does. You may have heard of “no-fault” states, but in the vast majority of cases, that refers to how injuries are handled (each injured person goes through their own insurance for injuries, subject to all sorts of restrictions and exceptions and blah blah blah). For Michigan, that also includes your auto’s damages. While it would take too long to go into all of the rules here, in general you go through your own insurance for any accident in Michigan, except there are ways in which you can collect up to $500 from a liable party.
So what if you’re from another state and you drive into Michigan? The rules change depending on whether or not your insurance company is registered with Michigan. And the rules change again based on how long you’ve been in Michigan in the last twelve months. And the rules change based on whether or not your car was legally parked or illegally parked or in use.
Long story short — if you spend any real time in Michigan, but you don’t live there, find out exactly what your coverage will and will not do.