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Filing an Insurance Claim vs. Paying out of Pocket

By Teri Dormer


If your car is totaled in a motor vehicle accident or your home is damaged during a hurricane, deciding to file an insurance claim may be a clear and obvious decision.

When the damage is less substantial, or if you only just enrolled in your insurance policy, you might be feeling more conflicted.

In reality, there are plenty of concerns you might have about deciding whether to file an insurance claim vs. paying out of pocket.

Will your insurance premium go up? Will your insurance provider drop you from their coverage? Is your deductible too high to make filing an insurance claim worth the headache?

What Happens After You File an Insurance Claim?

While every insurance claim will be different in its own ways, you can expect a somewhat similar process, whether you’re filing an auto insurance claim or a home insurance claim.

If you make the decision to file an insurance claim, you’ll first be contacted by an insurance adjuster to asses the full extent of damage and any personal injury that may have occurred.

In some cases, this will include a physical inspection of your property to fully ascertain the complete extent of the damage.

You may also be asked to provide evidence for the full value of the property damage (more common among older vehicles or a home insurance claim).

After the reviews are completed and an estimate is prepared, a check is delivered to you for any qualifying damages.

After filing an insurance claim, there are some scenarios where your insurance premium may go up or your insurance provider may decide to drop you from coverage. Let’s take a closer look at when to file an insurance claim vs. paying out of pocket (when not to file an insurance claim).

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Filing an Insurance Claim vs. Paying out of Pocket

This guide will help you determine when it’s best to file an insurance claim and when you should skip the claim and consider paying for the repairs yourself.

When Not to File an Insurance Claim

In some cases, it’s OK to not file an insurance claim after an accident or damage to your home. Here are a few of these instances:

The total damage is less than or equal to your deductible

If you’ve incurred damage to your car or home that isn’t overly substantial, you might want to consider not filing a claim with your insurance.

Not only can the claims process take longer to complete the necessary repairs, but you may face unnecessary repercussions from your insurance company.

These instances include a window being accidentally knocked out by a neighboring kid or a windstorm that damages only a few inexpensive items.

Only your vehicle is damaged or the total damage is negligible

If only your vehicle is damaged, you may want to consider not filing a claim with your insurance company.

Especially if you’re at fault, the total increase in your insurance premium over the next few years can be several thousand dollars, which could be more than they give you to repair the initial damage.

You’ve recently filed another at-fault insurance claim

If the damage is substantial, you may not have a choice. But if only your vehicle sustained damage or damage to the other vehicle is minimal, you might want to avoid filing an insurance claim at all.

When to File an Insurance Claim  

You’re not sure who is at fault

If you’re not sure who (or what) may have caused the damage to your home or car, you should always file an insurance claim. You don’t want to be straddled with extensive bills after an accident because you thought the other party might be at fault.  

Someone has been injured

Whenever there’s an injury of any kind, you should always file an insurance claim. Even if it doesn’t seem like a major injury at first, it could become a major problem for you (or the other party) later in life.

Damage to your car or home was substantial

If you’re dealing with more than a fender bender or a destroyed fence, you should always file a claim. You don’t know how deep the damage can go, and you don’t want to be left with the bill when it’s all said and done.

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How Many Days Do You Have to File an Insurance Claim?

In some cases, you may have as little as 30 or 40 days to file a claim with your insurance company after damage to your vehicle or home.

While some states allow for one to three years to report property damage or an injury, the longer you wait, the more difficult it can be to establish an at-fault party or incident.

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