Many insured drivers are choosing to sidestep their auto insurance when it comes to paying for vehicle repairs, according to findings from a new survey by LendingTree.
The survey, which surveyed 2,000 U.S. consumers aged 18 to 78, found overall, 39% of drivers who have experienced an accident or incident opted to pay out of pocket rather than file a claim. The main reasons cited include minimal damage, high deductibles and the fear of increasing their insurance premiums.
Male drivers were more likely to avoid filing a claim -- 45% said they had chosen to pay out of pocket at some point, compared to 32% of female drivers.
Younger consumers were also more likely to skip using insurance. While 43% of Millennials ages 28 to 43 have bypassed their insurance after an accident or incident, just 29% of Baby Boomers ages 60 to 78 say the same. Meanwhile, 49% of those with children younger than 18 have bypassed their insurance, compared with 32% of those with children 18 or older.
The study found 59% of drivers who bypassed insurance believed the damage was too minor to warrant a claim. Additionally, 44% felt their deductible was higher than the cost of repairs, while 42% were concerned about potential hikes in their insurance rates.
According to LendingTree auto insurance expert and licensed insurance agent Rob Bhatt, paying for minor repairs and saving insurance for the big stuff is generally best, especially if the insured caused the damage.
“A claim for an at-fault accident almost always increases your rates,” Bhatt said. “If someone else causes the damage, their policy’s liability coverage is supposed to cover your repairs with no deductible. If the at-fault driver is uninsured, your policy’s uninsured motorist or collision coverage kicks in -- if you have either. These coverages can also pay for repairs after a hit-and-run.”
The survey also found 57% of those who paid for repairs themselves chose not to report the incident to their insurer. Even with a deductible of less than $1,000, many preferred to avoid insurance altogether, with 76% of participants stating their out-of-pocket expenses were under $1,000.
The survey found 24% of drivers who did file an insurance claim later regretted their decision. Among the top reasons for this regret were significant increases in insurance rates (59%), a decrease in vehicle value (36%) and the burden of an expensive deductible (33%). Of those who filed a claim within the past five years, 26% reported their annual insurance premiums rose by at least 25%.
Regret is common among younger drivers, at 37% for Millennials and just 5% for Baby Boomers. Meanwhile, 41% of those with children younger than 18 have regretted filing, while just 10% of those with children 18 or older say similarly.
Men (30%) are also more likely to have post-claim regret than women (19%).
Overall, the data suggests a significant portion of drivers -- 73% -- would rather handle minor repairs themselves than deal with the complexities and potential drawbacks of filing an insurance claim.
The full report is available on the LendingTree website.
Trust Key to Customer Satisfaction Amid Rising Auto Insurance Rates
Auto insurance rates have surged by 11.2% on average over the past year, yet insurers continue to lose money, with an average loss of five cents on every dollar of premium collected. However, the 2024 J.D. Power U.S. Auto Insurance Study showed customer satisfaction scores are strongly correlated with the level of trust customers have in their insurers.
The average satisfaction score among customers with the highest trust levels is 917 out of 1,000 -- 426 points higher than those with the lowest trust levels. Additionally, 90% of customers in the high-trust category indicated they would likely renew their policies, compared to just 30% among those with low trust.
"Auto insurers are in a tough position right now," said Breanne Armstrong, director of global insurance intelligence at J.D. Power. "Even though high premiums negatively affect customer satisfaction, those negative influences can be offset by high levels of trust that insurers will come through when they are needed."
However, the study found most insurers struggle to build this crucial trust. Only 15% of customers fall into the high-trust category, while 51% have low trust in their insurers. Regional variations in trust levels are also notable -- in those with the highest incidence of insurer-initiated rate increases, such as Florida, 55% of customers reported low levels of trust.
The study highlights that managing customer expectations regarding rate increases is essential for building trust. Customers who understood and expected their rate increases had an average trust score of 735, nearly identical to those who experienced a rate decrease (736).
