Driver beware: 1 in 4 ‘at fault’ drivers pay cash for repairs to avoid insurance claim

Whether it is a nose-to-tail collision at a traffic light or an accidental bump into a stationary object- the majority of us have either been at the receiving or instigating end of a car accident, at one time or another.

However, regardless of who is at fault, new research by Australian price comparison site, Finder has revealed that thousands of Aussies are out of pocket every year instead of going through insurance after an accident.

The survey of 1,009 Australians found that 23% had been offered cash when involved in an accident instead of filing an insurance claim - that’s an estimated 4.8 million Aussies who hadn’t made a claim for damages they’d suffered to their car.

This decision can in some situations seem like the easier choice, or in some cases even be the result of feeling overwhelmed at the moment says Peta Taylor, car insurance expert at Finder.

“A driver may try to persuade you not to file a claim with insurance by making a cash offer at the accident scene,” she says.

“Navigating the aftermath of a car crash can be really overwhelming and drivers can be taken off-guard if the at-fault driver wants to pay out of pocket.”

What’s important to remember, Taylor says, is that in most instances, paying out of pocket only benefits the at-fault driver, so if you’re the innocent party, agreeing to this can be a risky decision.

“If it’s a minor incident, many are tempted to pay for repairs with cash and not report the accident to avoid insurance premiums going up or driving record being affected. But this only benefits the at-fault driver, and you are putting a lot of trust in someone you don’t know,” Taylor says.

Not only that but Taylor says that accepting a cash offer can end up being more expensive in the long run for the not-at-fault driver.

“Taking this route will likely involve out-of-pocket costs above and beyond the actual repair like temporary transportation costs or lost wages for time spent taking the car to get quotes,” she says.

“These can cost a lot of money and disruption and the other driver likely isn’t considering these.”

As well as increasing costs, it can even put your car insurance policy at risk because omitting details of a crash to your insurer could also be considered nondisclosure.?

“Failing to notify your own insurance may cause your insurer to later deny coverage for future damages,” Taylor says.

And while a minor bingle might not cause any immediate physical or other injuries, sometimes Taylor says, “injuries don’t show themselves until days after accidents, at which point the other driver is long gone.”

Due to these reasons, it isn’t surprising that Finder’s survey revealed that almost 1 in 5,?or 19% of drivers who have offered or accepted a cash settlement later regretted it with young drivers leading the way.

A whopping 27% of Gen Z and Gen Y younger drivers were the most likely to have offered or accepted cash for damage suffered in a car accident and later regretted it, with over a quarter admitting to realising they should have gone through insurance. That’s compared to 8% of Gen X, and 3% of Baby Boomers.?

But it’s important to remember that regardless of age, accidents can happen to both good and bad drivers -so it’s wise to be prepared whether you intend to make an insurance claim or not.

“Regardless of whether you decide to get insurance involved – take lots of details of the offending driver including licence number and address,” says Taylor.

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