Pay out-of-pocket or use insurance for a car accident?

bananaslug91September 24, 2007

I just rear-ended someone on the freeway. It's unclear what her damage costs will be (it looked minimal), but I'm fairly certain that mine will be in the $2000 - $3000 range. I had similar damage done when someone backed into me 3 years ago, and it cost $2300.

The car is a '96 Mazda Protege, 130K mileage, with a Blue Book value of $3900. I think that the insurance company may total it, and even if they don't, I'm not sure it's worth fixing.

The question is: should I use my insurance to pay for all of this or just try to pay out-of-pocket if the person that I hit will let me?

Of course, if I pay out-of-pocket I would forfeit the Blue Book value the insurance company may give me for totaling my car. But it would also mean that I could avoid a potential costly raise in my insurance rates. I've never actually hit anyone, but I've heard that the rates can go up substantially for 3 years after a claim.

Any thoughts?

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Your damage is "2000-3000" and her's is "minimal" ? I'm not so sure about that. I was rear ended years ago (my only accident). At the scene, the driver insisted that the damage was minimal, until I saw the SIDE of the trunk where it was creased from the impact.

Where I was (New York), drivers are required to report the accident, if the damage exceeds a certain monetary value, regardless of who pays for it. So don't expect the accident to remain a secret.

    Bookmark   September 24, 2007 at 8:22AM
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So, you pay out of pocket, both vehicals, and later she sues you for pain and suffering. then what ?

    Bookmark   September 24, 2007 at 8:21PM
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If you think there's at least $6,000 in damage for the two cars, and if there's even a possibility you could be sued, you need to think long and hard about how much this could cost you out of pocket versus a few years of somewhat-higher premiums.

Incidents like this are why you carry insurance. Use it.

    Bookmark   September 24, 2007 at 10:50PM
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Turn it in to insurance. That's what it's for.

Actually, if you have full coverage on a $4000 car, and they raise the rates substantially because you totaled it, it's time to look for another company anyway. If it were a $40k car, that would be different. That's assuming you've had few or no claims in the past. IMO, $4000 is close to not worth paying the premium for more than liability and uninsured motorist to start with.

    Bookmark   September 24, 2007 at 10:59PM
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Thanks for the input. The person I hit reported it to her insurance company today, so I didn't even have the option of paying out-of-pocket. But from the feedback I received, I think that was the best case scenario. Good point about her potentially suing me later...yikes!

    Bookmark   September 25, 2007 at 1:57AM
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