Should I settle directly, or go through insurance?

July 18, 2007 5:51 PM

My boss has an auto insurance policy with GEICO. I had an accident on my boss's policy. I called in the claim. Should we settle directly, or allow GEICO to cover the claim, if I won't be on the policy anymore at the time of renewal?

My boss has an auto insurance policy with GEICO. I had an accident on my boss's policy. I called in the claim.

My boss came by and offered to pay out of pocket. The folks I hit were fine with this, and got a quote for $687 (which seems very high).

GEICO called my boss and wants to see a fax of the check, and then plan to call the people who were hit for verification. They said a record of the accident will stay on the policy and be referenced by underwriters when they renew in November. I will not be on the policy anymore by that time.

Questions:

1. Given that I will not be on the policy at the time of renewal (and hence pose no further risk), are Geico's underwriters likely to raise the rate because the claim was filed?
2. If the underwriters will raise the rate regardless will they be sufficiently influenced by the fact that there was no monetary amount paid out by GEICO to raise it less, making it worth us taking the hit?

posted by bkudria to Work & Money (5 answers total)

1 - So you're on the policy now? As in a claimed driver with rights and privileges to the car as if you were the policy owner (ownership of the car aside)? If so, no, it will not affect your boss. If you're not, it's considered what's called a "lending loss" and they are seriously frowned upon in the underwriting world. That will follow him for five years, but it won't directly affect him or his rates - it affects him in the sense that if he has two tickets and is in the preferred category, but this lending loss could put him in a less desirable category.

2 - Depends on a number of factors, namely, how long your boss has had the policy with the company. Usually they are more likely to overlook an accident if you've been with them a number of years.
posted by sephira at 6:25 PM on July 18, 2007

I got in an accident where I was at fault, with GEICO as my insurance, last year. They were great about getting me taken care of, and then promptly dropped me when my policy came up for renewal. That pissed me off a lot for the inconvenience, although they ended up doing me a favor - my new insurer is quite a bit cheaper, even WITH the accident on my record! Not sure how that information might be useful to you, but I was taken aback by that approach, and figured you might be in for a surprise too in this case, regardless of how it gets handled.
posted by autojack at 6:39 PM on July 18, 2007

GEICO will drop anyone at the drop of a hat. They only want to receive money not pay out. I left them years ago.
posted by JayRwv at 6:41 PM on July 18, 2007

JayRwv, that was very true for GEICO in the 70's and sometime thereafter. Business was bad for insurance all around and a lot of companies ended up doing that. As a popular insurer, GEICO dropped a lot of people. They've since been trying to rid themselves of that image.

Chance are pretty low that the OP's boss will be dropped because of this, especially considering the payout ($678 for an accident is low by industry standards) and the fact that they're not really paying anything - at this point it's a mark on his CLUE report, but nothing more. But yes, his rates may rise. New York is a bit of tricky state as far as insurance goes, and it's tough to say at this point. It all really depends on the boss' time with the company and previous driving history - for all we know, this might be the final nail in the coffin of persistent DUI's/tickets/accidents. Or it may be a blip on the radar.
posted by sephira at 7:34 PM on July 18, 2007

Eeep, I meant $687. Still kind of low as far accidents are concerned, but since GEICO isn't paying for it, they aren't concerned about payout; it's more about the number of previous occurrences at this point.
posted by sephira at 7:35 PM on July 18, 2007