Should I File an Insurance Claim or Pay Out of Pocket?

Sometimes, when you have a minor accident (or in some cases, even a major one) you may wonder whether it is best to file a claim with your insurance company or just pay for the damages out of pocket. As you may know, filing claims can have an effect on your insurance premiums and will add to your claims history. Given the rising costs of today, many of us are looking to avoid any changes that can have an impact on our insurance rates.  However, you will want to evaluate the situation so that you make a financially smart decision that won’t cause headaches moving forward.

What does it mean to pay out of pocket?

Paying out of pocket means that you don’t file a claim with your insurance company and you pay all of the costs related to the damages yourself.  There is no adjuster review of your claim and no claim number assigned.  You get your own estimates completed, choose your own shop, define your own repairs and cover the full cost.

Can you afford it?

Your first consideration should be whether it is even feasible to pay out of pocket.  What will be the cost of taking care of accident damages yourself?  Did you knock down your mailbox in your yard and now only need to repair a small dent to your vehicle and the mailbox? You will want to get estimates from at least a couple of body shops for the damages to any vehicles involved to determine a baseline for the cost to repair.  Keep in mind that these are initial estimates and may not consider any underlying damage that is not immediately visible.

o   Did your accident involve one car or more than one?

o   How extensive is the damage, is it a minor fender bender with only cosmetic damage or was the damage more severe?

o   Is the cost to repair higher than your deductible?

o   What parts of the vehicle(s) have damage?

o   Is there damage to fixed or personal property you may be responsible for? (fixtures such as walls, poles, medians or even personal property like car seats, tools or electronics)

These are very basic questions about the nature of the damage involved because car repairs, much like everything else in our economy, have become significantly more expensive in recent years.  Adding in the relative sophistication of many cars (consider that you now have to consider the expense of repairing or replacing sensors and recalibrating them in many minor or basic fender benders) this is a step that you will want to research thoroughly so that you are not caught off guard when it is time to pay.

Are there hidden costs?

There are times when insureds want to pay out of pocket for claims involving other vehicles. These cases usually have the most potential for hidden costs. If you and the other party have agreed on who is at fault and you are considering paying for expenses out of pocket, keep there are certain additional considerations to keep in mind.

A very obvious example of this is a minor fender bender where one of the parties claims injuries. In cases where you have accepted fault, those injury expenses would also be part of the expenses to consider and transforms the situation from a simple accident with minor damage to vehicles to an injury claim that may now have compliance and legal considerations.  In this case, you are better off filing a claim with your insurer to cover any other issues that may arise. Also, keep in mind that injuries may not be immediately obvious.  Someone may be injured and not realize it for a couple of weeks. When looking at something like this consider:

o   Are there injuries?

o   Is there the potential for any injuries?

Another example of a liability that could arise unexpectedly is where you have an accident, you have gotten the initial estimate and everything is straightforward at first.  Then, once the repair is complete you don’t just have rear bumper damage, but now it appears as if the electrical system may be involved or the shop that was chosen just didn’t do a good job with the repair.  Who pays for these follow up costs?  How do you determine who is responsible for them?

These are expenses that may be unexpected for you but that your insurance company would be prepared to handle.  You have to trust that the other parties involved are straightforward and honest and that any agreements made between you will be honored.

When should you consider filing a claim?

While there are many considerations to take into account, there are times when you should consider filing a claim.  Examples include when repair costs are significantly higher than your deductible, where damage to your vehicle is a safety issue (damage to the frame or suspension, where airbags have deployed, or there is damage to your ADAS sensors). You will also want to consider filing a claim where another party is at fault or in cases where you have a comprehensive claim (theft, fire, hail and animal impact are examples). When you are getting estimates completed, ask about the potential for hidden damage so you can take into account whether the estimate is likely to increase one work begins.

You can also file a claim and decide not to proceed with using the claim.  You can file with your insurer, get your initial estimate and then decide that you would rather pay out of pocket.  In these cases, your claim history would note an open claim where no payments were made.  This could limit impact to your rates in cases where you are undecided as to whether you would like to complete repairs with a claim or out of pocket.

How can a claim affect my insurance?

Although the concern with filing a claim is that it will affect your rates, this isn’t always the case.  You have to consider whether the accident is an at-fault accident or not, what your claims history is and any state regulations specific to your area that may also be causing an impact to your rates. Comprehensive claims also tend to have less of an impact on rates when filed. Insurance rates are based on a wide range of factors, not all of them having to do with claims.

Other myths…

If I file a claim it will be completely off my record.  This is not always true. As discussed above, there are many cases where accidents involve other parties or property and although you may not file a claim, they very well might.

If I call my insurance company it automatically means a claim has been filed. You can call your insurance company and file an incident or notification.  This means that you have notified your insurance company that an incident has occurred with the potential for a claim, but no claim is opened. You are not assigned a claim number or adjuster and no further action will be taken unless you decide to open a full claim.

If I file a claim, my insurance company will force me to use their shop.  You always have a right to choose your own shop, your only consideration will be any out of pocket costs that your insurance company may not cover (eg. higher labor rates, OEM parts or repairs not associated with your current claim).

Conclusion

Make sure you do your research before paying a claim out of pocket. Take into consideration any up front and hidden costs, so you don’t find yourself with any unexpected expenses. Out of pocket claims are more suited to simple claims with one car involved and cosmetic damage only. If in the end, the cost becomes too much, file a claim with your insurance company and pay your deductible, it is always an option. 

© 2026 The Anonymous Adjuster. All rights reserved.
This content is for educational purposes only and does not constitute legal or insurance advice.