When does it make sense to pay for auto body repair out of pocket?

pay out of pocket for repairs

At O’Rielly Collision Centers here in Tucson Arizona, we get accident damaged cars into out body shop every day. The damages range from minor scrapes and hail damage, to obviously totaled cars.

Most of the time our customers simply file an insurance claim and get the repairs done. While that is certainly an option, there is another option for paying for auto body repairs, a term we call “self-pay” or “Out of Pocket” payments. Simply stated, the customer opts to pay for the repair instead of filling an insurance claim.

So when does it make sense to do a self-pay instead of an insurance claim? We explore the thought process below.

1. Consider your deductible.
In most cases, collision repair comes with a deductible payment. Each policy is different, but, generally speaking, most deductibles are in the $500- $1,000 range. The more you pay in deductible, the less your monthly insurance rate is, but you pay the price in the event of an accident.

First, check with the insurance company to verify what your deductible is. Compare this to the price of the repair. Let’s say for example that you did $970 worth of damage to your car. If you have a $1,000 deductible, then the answer is obvious- pay for the auto body repair out of pocket.

But what if you have a $500 deductible? Certainly you could get your car fixed for just $500, with the insurance company paying the remaining $470. However, a collision repair reported on your insurance is almost certain to raise your rates.

2. Factor in your potential Car Insurance rate increase
If your rates go up because you filed a claim, you could be paying that difference in the repair over a long period of time. If you live in am at-fault state, or even pick up a point on your driver’s license as a result of the accident (assuming you were cited for doing something illegal which caused the accident), you could be paying $300-$500 a year extra for three or more years. Most insurance companies count accidents against you in your rate for three to five years.  Allstate Insurance says just one point on your driving record could equate to a $400 increase in premiums.

3. Shop for discounts
Not all auto body repair shops have discounts and specials, but some do, and there is sometimes room for negotiation in a self-pay situation. When a repair is being performed and paid for by the insurance company, the repair, the shop rates, and the parts used are all influenced and sometimes dictated by the insurance company. But when you are dealing directly with your repair shop, and paying the whole repair bill, the shop might have more options available to them, and can get more creative in helping to fit your repair budget.
4. Consider the condition of the rest of the car
If your car is old, has other damages, or failing, rusty, or faded auto bodywork, the collision repair might not be worth the money. If the damage does not affect the safe operation of the car and is merely cosmetic, like say a large crease, or a big dent in the bumper corner, you might be able to live with the car as is, even though it is unsightly. There are no laws about the condition of your car, only the safety of its construction.

5. You are not at fault
Obviously, if your car was damaged and you are not at fault, the other insurance company should pay to repair your car to pre-accident condition. In this case, you should not be out any money and not even your deductible however certain situations can vary. If you are in an accident in a no-fault state, you might have to pay a deductible because the laws do not assign guilt or fault to an accident. Here again, consider striking a deal with your repair shop as a self-pay before you process a claim.

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