Insurance Advice: Claims, Repairs, And Knowing Insurance Fraud When You See It

Recently on the All Things Insurance subreddit, a user who was in a small motorcycle accident inquired as to what his options were for getting the cycle fixed — to file a claim or not to file a claim, essentially. Here’s the story in his own words. We include it here because it not only highlights the benefits of fixing certain things yourself, but it also shows how customers are not always understanding of how insurance works, and that lack of understanding can lead to trouble (in more ways than one).

His words:

“I hit a deer last week with my 06 GS500f. I’m estimating probably around $600 if I do all the repairs my self. That’s not counting helmet replacement ($200) which is covered in my policy.

“I dropped it on the left side when I first got it and would like to include that in the same claim if I could ($200 for the part). I have Progressive insurance with a $500 deductible and full coverage. I have never filed a claim to get my vehicles repaired and my last claim was in 2012 on my auto policy. Is it worth it to file a claim and will they raise my rates even though they say they won’t?”

Before we get in to the merits of paying for a repair yourself over filing a claim, let’s first address the elephant in the post. The user says that he is thinking about including prior damage in the current claim. While we’re sure from the phrasing that he is just a bit clueless as to how insurance works and is not actually trying to break the law, that does not negate the fact that doing this would be insurance fraud, and ignorance of the law is no excuse.

Insurance fraud isn’t a victimless crime. It affects rates which naturally spills over to customers. Now that we’ve said that:


Is It Worth It To File A Claim?

The fact that this customer is asking the question goes to show that he sees the true purpose of insurance, and that is to protect you from the large events that you can’t possibly handle yourself. While some may not find it feasible to fix $800 worth of things on their own, most could easily pay this off in a year’s time and keep the claim off their records.

This is wise from a financial standpoint, and you can do it in such a way that it doesn’t hurt you as much as you think.

For starters, calculate the amount that you can feasibly afford to pay off in a year or less. If you could handle a $1,000 repair, then make sure that your deductible is higher than that. You’ll get a lower premium in return, and that frees up additional monies that you can put towards your emergency fund.

In my case, $800 worth of repairs would not be worth filing a claim. That’s because I think of insurance — whether it’s auto, home, motorcycle or other — as something to guard against the perils of life. I do not find expenses that go away after four to eight months to fit the definition of “perilous.”

It might mean cutting back expenses in other areas for a few months, but it will pay off in the long run to keep those rates low.


In Summary

If you are uncertain whether or not to pay the repair costs or file a claim, take a look at your financial situation and see what you could be cutting back on. Also, remember that raising your deductible lowers your premiums. If you can come up with enough to pay off a repair in 12 months or less without breaking the bank, then consider holding back on filing a claim. There may come a day when you need your policy for something big. Make sure it’s still there, and at an affordable rate should that day ever come.

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