Husband: "Honey, Jr.'s only been driving a month and he's already hit neighbor Bob's mailbox and trashed it. I'm going to Home Depot to get him a new mailbox, then over to his house with a 6 pack and he and I are going to put the new one up. We won't turn this in - I'm afraid of what it is going to do to our auto rates."
Keep in mind your Auto Insurance Policy is a contract between you and the Insurance Company. Part of your contract requires that you to provide timely notice of claims or potential claims to the Insurer.
However, in the example above, the husband and Bob have been great friends for years and something like this probably never becomes an issue. But let's take another example:
Husband: "Honey, I hit someone from behind at a stoplight this morning. The damage was nominal and I told her I would handle it without getting the Insurance company involved - she agreed and seemed nice, so it should be fine."
Wife: "Hmmm, I don't know about this one."
As it turns out, the damage is a few hundred more than what the husband expected and he did not factor that she would be entitled to a rental car while her car was being repaired. In addition, the repair was not done properly and had to go back in the shop and the lady needed another rental car. The husband objected since she chose the shop but did eventually agree after some delay. Now the relationship was strained and the worse is yet to come.
10 weeks after the accident the lady calls and say's her neck has been bothering her since the accident and it seems to be getting worse. This has gone beyond what the husband anticipated and he realizes it's not something he is equipped to handle. So he contacts the Insurance Company to turn in the claim.
At this point I'm very concerned for the husband (and his wife), since he has a Duty to Promptly Notify the Insurance Company of any accidents. Would ten weeks be considered prompt? probably not. Because of this the Insurance Company is well positioned to deny the claim.
Some may start complaining about the Company's position, but let's look at what may have happened above. The lady was originally okay with the husband handling the claim. But when they had the go around about the 2nd repair and rental vehicle, she got irritated and tells Betty the story in the break room. Betty comes up with the injured neck story and the lady decides to run with it.
Had the claim originally been turned in to the Insurance Company, they take over for the husband and handle everything quickly, including the 2nd repair and rental. The lady is content and never even mentions the story to Break Room Betty. Now the claim stays contained at $1,400 instead of $1,400 plus the potential significant settlement for the neck injury and the additional expense of a prolonged claim.
One other item, if you tell your agent about a claim, they are obligated to notify the Insurance Company per their contract with the Insurance Company.
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