How to Settle an Auto Accident Without an Insurance Company

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses...

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/ciccom-live/41b5e36b-joel-ohman.jpg

UPDATED: Jul 21, 2017

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Here's what you need to know...
  • Filing an auto insurance claim can more than double your auto insurance premiums when you’re at fault.
  • Some individuals choose to settle an accident and pay for damages without notifying their insurer.
  • Be sure to check your contract and review your duties as a policyholder before you’re tempted to keep your accident secret.


One of the primary reasons why car insurance is required in virtually every state is because it can be a financial lifesaver after a serious accident.

Since there’s no financial requirement saying that you must have assets or a savings account to own a car, the state has to be sure that all drivers can pay for damages that they cause by requiring them to carry liability coverage.

Failure to comply with these  compulsory insurance laws can result in some hefty penalties.

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How do accidents affect your insurance rates?

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Before you ever file a claim, you should consider the effect that a single claim could have on your premiums. If you go from an accident-free rating to one with an at-fault accident, your entire risk profile will change.

If you go from an accident-free rating to one with an at-fault accident, your entire risk profile will change.

With a riskier classification comes higher premiums. How much your premiums will go up depends on all of your rating factors, your record prior to the accident, and the state that you live in.

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What is the average rate increase following an accident?

Nationwide, the average policyholder will pay about 41 percent more in premium following a single at-fault crash.

Considering that the average annual premium for insurance in the U.S. is $841.23 per year, policyholders who pay close to the average rate can expect to pay $345 more throughout the year on premiums for as long as the accident is chargeable.

The increase jumps up to an average of 93 percent when you file two accident claims in the same year.

If you combine accidents with violations or a high-performance vehicle, this premium increase goes up even more.

Is there ever a time where premiums won’t go up after a claim?

Insurance claims binder

Before you’re set on settling a claim without your insurer, you should check to see if your claim would even be chargeable. Not all claims automatically fall into the chargeable bubble.

First off, any claim with damage at the threshold designated by the Department of Insurance can’t affect your rates. This threshold is between $500 and $2400 and varies from state to state.

If the damage will almost certainly go above the threshold, the next thing to look for is the accident forgiveness component. Drivers who have had clean driving records for years might be forgiven for their first claim.

This is a feature that larger and more respected insurance companies offer to drivers who’re eligible.

Know the Risks of Not Filing

When you buy a Personal Auto Policy, you’re agreeing to the terms and conditions written into the policy. You must pay your premiums and fulfill your obligations as a policyholder for your insurer to cover claims.

One of your duties as an insured is to notify the insurer within a reasonable amount of time after you have a loss. A reasonable amount of time depends on whether or not you were injured in the accident.

If you don’t file a claim within a window of time that’s deemed reasonable, the insurer has every right to deny your claim.

So, even though you’re not required by law to file a claim for an accident, it can put you in financial hot water if you try to settle the claim on your own and the bills start to get out of hand.

You won’t have the insurer to protect you and if the claim goes to court you’ll have to pay for those costs out-of-pocket too.

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Scenarios Where Settling an Accident Without Insurance Makes Sense

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Putting down the phone and picking up the burden of paying for damages doesn’t always make sense. There are some scenarios, however, that are less risky than others.

Here are some signs that you should contemplate your own settlement under the table without involving your insurer:

  • You’re in a minor single-car accident with no injuries
  • You’ve gotten an estimate from a professional and can cover the costs
  • You’re at fault for the collision and you’ve already filed multiple claims
  • You know the other party and they are reasonable and fair
  • You are confident that you have the money to pay for the repairs you’ve promised to pay for

Signs That You Should Call Your Insurer

You carry high deductibles to ward you off from filing unnecessary claims, but not all claims are manageable on your own.

Here are some signs that it’s time to call your insurer:

  • There’s extensive damage
  • There are injuries (real or fake)
  • The other driver will do their own repairs
  • Cash is being offered without any estimates
  • The driver won’t answer the phone

Steps to Take to Settle the Accident

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It can be risky to settle on your own. If you’re convinced that you’re better off settling on your own, here are some tips:

  • Collect the name, address and phone number of the driver at the scene
  • Take a picture of the license
  • Gather the other party’s insurance information for protection
  • Get multiple estimates for repairs from a reputable shop
  • Ask the party to sign a release of their right to claim once repairs are paid
  • Report a claim to the DMV if it exceeds property damage threshold

Not everyone wants to use their insurance when they have a potential claim. If you value low rates, paying for repairs on your own could be a wise choice.

Consumers who aren’t happy with their rates should always shop around. Use an online rate comparison tool to see how much you’ll pay and choose an insurance policy that saves your money while protecting your assets.

Enter your zip code in our FREE tool below to compare car insurance rates now!

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