Fresh off a new parking lot fender bender (thank goodness no one was hurt!), it’s time to drill down on the money aspect of the damage. Even though I carry insurance, it’s always better to step back and look at the math to determine the best way to proceed financially. For small fender benders, it’s almost always cheaper to pay out of pocket to fix the damage than to have your insurance pay for it, only to increase your premiums down the road.
I’m a strong believer in only insuring for catastrophes, using high deductibles, dropping coverage as soon as the car has lost most of it’s value, and paying for everything else out of pocket.
Insurance Versus Self Pay
My insurance deductible is $1000. I took a look at my policy ($295), and it looks like I’ll lose at least $94 in discounts. In addition, my base premium would likely be increased for submitting a claim, we’ll assume a minimum 20% premium increase (it would probably be more), or $59 for each half year over the next 5 years. Although since I don’t have access to their rating plan, this is all just estimates based on some prior years data I saved from previous insurance claims and violations and years of working in the insurance industry.
So, if I choose to have my insurance pay the guy, I’d probably have to pay at least $1,000 + $1530 ($94 + $59 x 2 x 5 years). Ignoring the time value of money (which is probably offset by the compounding value of the regular increase in base premiums anyways), it’s probably in our best interest to foot the bill myself if the damage estimate is anything less than $2530. Anything around that number and it could be a toss up, significantly above that, and I might want to get insurance involved.
Replacement Parts and Estimates
My husband found a replacement part for my car for $280 on ebay. Of course, I had to hit a luxury car, so I’m guessing the other party probably won’t endorse buying parts on ebay or just living with the scratches like I plan to! Even though my rear bumper crumpled easily like a styrofoam cup and my car took most of the damage, I’m sure his estimate will be significantly higher to replace a headlight and scratches in the paint.
Humor me… what do you think his estimate will be?
By the Numbers
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Depending on where you live, try to get to the areas where the economic situation is not strong (not risky areas). Get estimates from those shops on fixing the absolutely needed and you will get lower estimates. Also, recommend the luxury car owner to do the same, and vouch for the work that they do.
I just got a muffler issue fixed on my car and Firestone quoted $294.25 (written estimate obtained by taking the car in). I went to where there were spanish speaking workers, and they only removed/fixed the part that was punctured, and it cost me $82.00. Sure, there entire pipes leading to it will die someday, but then replacing things that is NOT needed is waste (regardless of what it is).
So, see if you can do the above, since I have done it when my wife did some accidents. Even when we were at fault, I have taken the check from the insurance company and told these shops to do the work for the amount I received (which would be the claim amount minus deductible). And, they have DONE it by getting parts from the junk yard (similar to your ebay story).
All of the above is not easy, but it is part of economizing to get things done for 1/2 the price, with 98% to 100% accuracy level. There might not be an AC waiting room while you wait to see the work being done, so sweat it a bit and save money for college tuitions that are going up at 12.6% rates!!!!!!
I don’t think you say whether it was your fault, but so I just wanted to share that when we were rear-ended a couple of years ago, we actually got our deductible back from our insurance company because the accident wasn’t our fault. It’s something to consider when calculating the costs.