You may not always have to accept a claim payment from your insurance company after an auto accident. Of course, you may be obligated to pay for damages or injuries you cause to others with your insurance, but not necessarily for damages to your own vehicle. There are some valid reasons why withdrawing your claim before it is paid may be in your best interest.
Don't Accept Payment
If you are even considering withdrawing your claim, be sure not to accept any settlement check from a claims adjuster. Once you cash the check, the insurance company will consider the claim as being paid and it becomes a permanent part of your record with the insurer. It is possible that the insurer could agree to accept reimbursement for the claim payment, but it is under no obligation to withdraw the claim and probably will not do so without a compelling reason.
Insurance companies use certain underwriting guidelines to determine whether to keep you as a policyholder. If you have a history of accident claims with the insurer, even one more small accident could be the one that puts you "over the top" and make your carrier decide to drop you. If you've had several previous accidents, you might want to discuss the situation with your agent before accepting the claim check. If the claim is relatively small, paying for it out of your own pocket might spare you the greater expense of having to obtain non-standard coverage due to cancellation.
You may want to withdraw a claim if it turns out that the damage is minimal or just over your deductible, which is the amount you are required out of your own pocket. For instance, if the damage to your vehicle turns out to be $550 and you carry a $500 deductible, you would only receive $50 from your insurance company while still having the claim become a part of your record with insurer. The claim could have a negative future impact with the insurer or if you try to obtain coverage elsewhere.
Avoiding a Premium Increase
Many auto insurance companies offer discounts as a way to reward drivers who avoid accidents. If you accept the claim payment, you could lose your discount that may result in a substantial premium increase. Your company could also assess a surcharge to your premium. As with potential cancellation, a discussion with your agent before accepting payment can help you understand the impact the claim will have on your premium.