Every year, there are more than 10 million car accidents in the U.S., from devastating highway pileups to minor fender benders. Those 27,000-plus daily accidents cost Americans $871 billion every year in lost productivity, property damage, medical bills, legal fees, and other expenses, according to a 2014 study by the National Highway Traffic Safety Administration (NHTSA).
Of course, the financial cost of a car wreck pales in comparison to the pain and suffering that follows when someone is severely injured or killed in an accident. But even a minor collision where everyone walks away without serious injury can lead to big financial expenses, which are often greater than many people expect they’ll be.
If you’ve never been in a car accident, consider yourself fortunate. But if you drive with any frequency, chances are you’re eventually going to end up exchanging insurance information with another driver. The average driver files a collision claim about once every 18 years, according to insurance industry estimates. That could mean three or four separate accidents for someone who starts driving at 16 and stops getting behind the wheel at 80.
Every one of those accidents comes with a financial cost. Here are the ways that you’ll end up paying the next time you wreck your car, plus some tips for saving on those costs.
1. Increased insurance premiums
A spike in insurance premiums is the most obvious consequence of a car accident. You’ll pay an average of 41% more for insurance after making just one claim, according to a survey by InsuranceQuotes.com. Plus, if you cause the accident and are getting a good driver discount, you may lose that perk. But you may get a break, as some insurers won’t hike your premiums after a minor accident, especially if you have a spotless driving record.
Ways to save: If you’re in a very minor accident that doesn’t involve another person or vehicle, like backing into a garage, you can probably get away without reporting it to your insurer, according to Consumer Reports, thus saving you on increased premiums.
2. Car repairs
In theory, your insurer (or the insurance of the person who caused the accident) will cover the costs of getting your car back on the road. But if you don’t have comprehensive or collision coverage, you may have to pay for the repairs yourself. And whatever type of coverage you have, you’ll still be on the hook for the deductible.
Ways to save: Work with a mechanic you trust if you have to pay for repairs yourself and have an emergency fund to cover out-of-pocket expenses.
3. Car rental
If your car ends up in the shop for repairs, you’re going to need a way to get around. Your insurer will cover the cost of a rental if you have rental reimbursement coverage, otherwise, you’ll end up paying for a temporary set of wheels yourself. Watch out for hidden costs and surcharges if you’re renting. Also, keep in mind that if you’re not at fault in the accident, the other person’s insurance should cover the cost of your rental, though there may be limits on how much the company will pay per day.
Ways to save: Shop around for the best deal on a rental if you have to pay for it yourself, or consider going without a car for a few days by taking public transit, or carpooling. Find out if your regular auto insurance policy covers a rental and decline any additional insurance the rental car agency tries to sell you if it does.
4. Emergency room co-pays, doctor visits, and other medical expenses
This expense is a real wild card, since even small accidents can result in costly ambulance rides and trips to the emergency room. Insurance should cover most or all of these costs, assuming you or the at-fault driver has coverage of some sort. But because several different insurance providers are typically involved with medical claims following an accident, it can take a while to sort out who pays for what. In a worst-case scenario, your account may get sent to collections while you wait for insurers to decide who’s responsible for the bill, according to a report from Credit.com. That can damage your credit.
One piece of good news: If you have medical payments coverage on your insurance policy, you should get reimbursement for certain out-of-pocket medical expenses, like co-pays or deductibles.
Ways to save: Be proactive about making sure bills get paid and keep good records. Getting your car insurer to reimburse you for the out-of-pocket cost of an emergency room visit or follow-up visits with your doctor could save you hundreds of dollars.
5. Paying off your car loan
When you total your car, your insurer pays out the actual cash value of the vehicle. But that may not be enough to pay off the balance of your auto loan. Your lender, however, doesn’t care that your car has been wrecked. They just want the money you borrowed back. Depending on the size of your loan and the value of your car, you could be on the hook for thousands of dollars.
Ways to save: Get gap insurance, a kind of coverage specifically designed to cover the difference between what your auto insurer pays after an accident and what you still owe on your car loan. “Anybody who has an auto loan or lease and hasn’t put a significant amount down should buy car gap insurance,” Bill Pearse, vice president of auto product strategy and design for Travelers Insurance, told Bankrate.