Car insurance is a fairly straightforward concept. You pay a monthly premium, and in exchange, the insurance company covers you for things like crashes or theft. That monthly premium depends on a lot of things, including your age, your gender, where you live, how much you drive, and, importantly, your driving record.
The more speeding tickets and car crashes on your record, the more of a liability you are to an insurance company. And if you’re a bigger liability, the insurance company will charge you a higher premium. This leads to people avoiding insurance claims for things like crashes, instead opting to have the damage fixed under the table—that is, without getting insurance companies involved—as to keep their rates down.
According to a new survey from LendingTree, over a third of drivers questioned would rather eat the cost of the damage caused by a crash than have their insurance—which they pay for—cover the bill. And an even greater number of people have admitted to paying out of pocket to keep their rates down. From the survey results:
Insurance is designed to be a peace of mind. For some, it’s a source of fear.
A little over a third (35%) of our insured drivers have avoided filing a claim because they were afraid their premiums would go up. A similar LendingTree survey found that 39% of drivers opted to pay out of pocket for car repairs after an accident. Of those, 42% said they didn’t file to avoid a rate increase.
Interestingly, this number swung wildly depending on the age group surveyed. According to LendingTree, 78 percent of baby boomers said they’ve never avoided filing a claim due to fears of a premium increase. That percentage falls all the way to 44 percent for Gen Z drivers, with Millennials following closely behind at 43 percent.
Source: Brian Silvestro
There are some instances where it’s probably better to avoid calling your insurance company, like if you cause superficial damage to your own vehicle (LendingTree mentions rubbing against a guard rail or bumping a light post as fine examples of this). There’s no reason to add curbing your wheels or bottoming out your front lip to the record if you don’t have to.
It’s also important to note that not all claims will be held against you. If you have comprehensive insurance—the type that covers your car for non-collision incidents like theft, vandalism, hail, flood, or fire—LendingTree says that most companies won’t raise your rates for those types of claims. So make sure to check your policy before swiping your credit card for a huge repair bill. In the long run, the math might not work out.
The survey also asked about the rising costs of insurance, with some fascinating results. Over half the people surveyed (54 percent) said that rising premiums have them considering cutting back insurance coverage. And 48 percent of those surveyed said that financial constraints have them considering the same. And 58 percent say auto insurance “is a financial burden.”
Source: Brian Silvestro
Considering some of the rates I’ve been quoted recently, I’d agree with these people. I remember trying to get my old Mitsubishi Lancer Evolution comprehensive insurance a couple of years ago, only to learn it would be several thousand dollars for six months of coverage (I have no accidents or speeding tickets on my record). So I settled for the basic liability-only stuff required by law in New York, where I live. It’s tough out here.
The most surprising statistic from LendingTree’s survey is the sheer number of people who have driven with no insurance at all—something that’s fully illegal in every State except New Hampshire. An entire 30 percent of the folks surveyed say they’ve driven with zero coverage in the past. Millennials were most likely to pull this off, with 40 percent of those surveyed having admitted to doing it. Weirdly, 43 percent of parents with kids under 18 years old admit to driving without insurance.
Here’s some controversial advice: Don’t do this! Driving without insurance leaves you personally liable for any damages you may cause to your car or someone else’s. You’d also be responsible for covering medical expenses for injuries, which can easily reach tens of thousands of dollars (or more). Insurance might be expensive, but going into generational-level debt because you didn’t want to pay a few hundred bucks for your premium is not the move.
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