When Should You Use Your Auto Insurance?

By Author: ben austen
Total Articles: 21
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There are really no great excuses for not having auto insurance, but there are many points of confusion over when to use it that you should be aware of.

When you consider how litigious the landscape is across the nation, not having a way to protect yourself against an unscrupulous driver or other issues that surround driving and accidents is simply way too risky. One bad false claim in court against you could wipe out your entire savings account, not to mention cost you thousands of dollars in lost wages from work, hijack your credit score and your ability to shop for decent auto insurance rates.

But even insurance experts will agree: once you buy your auto insurance coverage many questions will still arise about when you need to use your coverage and when it’s best to pay out of pocket for losses incurred in an accident or other related event.

In many cases, the decision to file an insurance claim leaves little to chance. If you are involved in a car accident with another driver and there is significant damage to your car and/or their, then yes, it makes sense that you would ...
... want to tap your auto insurance claim and get the funds you need to help pay for the repairs to your car and to theirs.

However, many industry articles and experts have suggested that there are also several scenarios where it may be to your advantage (and possibly the other driver’s) to avoid utilizing your auto insurance and pay out of pocket.

For example, let’s say you hit the wall of your garage trying to back out one morning in a rush to get to work. The bumper has a tiny dent on it, but other than that, there is no significant damage. You’ll probably find that the costs to replace a bumper on your car will be lower than the cost of tapping your collision policy.

Experts suggest that you save your collision coverage and deductibles for more significant scenarios to keep your insurance rates from going up. This applies to the present as well as the future, because every time you use your insurance policy to cover damages to your car, even the minor damage, you create a record of “liability” activity.

This stays with you going forward and can possibly impact your premium rates down the road, as many carriers will base your premium rates on the fact that you have filed multiple claims. Wouldn’t it be best to simply save protect your premiums so that, in the event you are involved in a more serious auto accident you have the ability to tap your collision coverage without too much collateral damage to your wallet and driving history?

Here’s another reason in reverse: Many insurance companies offer what are called “good driver” discounts. Even if you bump that wall, tap that car in front of you, or hit a shopping cart in the parking lot at the supermarket, filing a claim to have the dents taken out or the paint retouched can eliminate your good driver status very quickly.

It’s also critical to keep in mind that there is always a possibility your carrier will deny your renewal for coverage if you have too many “at fault” claims on your driving history. So, while it may seem like a safe bet to use your policy to pay for that bumper or new paint job on the door, in the long run you could end up spending more money trying to renew your policy and obtain coverage because of the impact all those small little bumps and nicks had on your premium across the board.

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