by Guest » Fri Jan 18, 2013 01:28 pm
I was involved in a minor fender bender - my fault. The other party is seeking compensation. His insurance company called me up to ask whether they'll claim against my policy or I will pay directly to him. I went ahead to compare estimates at repair shops and found they're claiming a sound amount. Will this be considered as insurance fraud by my company, if I pay them for damages?
Posted: Sun Jan 20, 2013 01:10 am Post Subject:
Will this be considered as insurance fraud by my company, if I pay them for damages?
No, it's not insurance fraud. You are free to pay for any damage you do to someone else's property, instead of filing the claim with your insurance company and using their money to pay the claim. But if you think this will prevent your premiums from being increased, it may or may not.
Your premiums are based on your driving record and the loss could still affect your premium in the future, even if you pay it out of pocket.
Posted: Mon Jan 21, 2013 01:27 pm Post Subject:
If the cost for the damage repairs is considerably less, it rather makes sense to pay it on your own - Especially if your deductible amount costs more than what you have to pay to the other party.
Posted: Mon Jan 21, 2013 02:11 pm Post Subject:
Especially if your deductible amount costs more than what you have to pay to the other party.
The OP is talking about a liability claim. It's very rare that a person would have a liability deductible. If they did, they might as well pay the claim anyway as their insurance company would seek recovery of the deductible. The OP is talking about paying the claim himself in order to avoid reporting an at fault claim.Posted: Mon Jan 21, 2013 03:32 pm Post Subject:
tcope is correct. In a personal auto policy, there is no deductible for liability claims -- which are the claims of third parties. Deductibles apply to one's own damages paid as first-party claims.
In most cases, the liability loss will be hundreds to thousands more than what an insured pays for their liability coverage, which is the reason liability insurance is valuable -- pay a few hundred dollars per year and have, perhaps, hundreds of thousands of dollars of protection. What most people do not realize is that the cost difference between minimum liability and maximum limits ($300,000 to $500,000) is maybe $0.20 to $0.50 per day. Beyond that, a person could purchase an "umbrella" liability policy with another $1,000,000 or more in "excess" liability protection for less than $300 per year.
In CA, for example, where the minimum is just $30,000 per accident for bodily injury, and only $5000 for property damage, minimum liability coverage might be $200 for 6 months on a late-model Toyota Corolla for a driver age 21 with three or more years of licensed experience and a good driving record. To increase that to $300,000 and $50,000 per accident might raise the cost to just $275-$300 for 6 months -- ten times more coverage for $100 or less. Many insurance agents routinely fail to communicate this information, leaving insureds woefully underinsured, and causing people like me to have to carry high limits of UNISURED/UNDERINSURED motorist coverage to match my high limits of liability coverage.
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