Should I Claim on My Car Insurance or Pay for the Repair Myself?

The core question: how does your excess compare to the repair cost?

Your excess is the amount you pay out of pocket when you make a claim. Your insurer covers everything above that. So the first thing to do is dig out your policy and find your excess amount.

If the repair cost is less than or close to your excess, claiming makes little financial sense. You'd be paying roughly the same amount either way, but with the added cost of a potential premium increase on top.

As a rough rule, if the repair cost is less than twice your excess, it's usually worth getting an independent repair quote and paying out of pocket rather than claiming.

What actually happens to your premium after a claim?

This is where many people get caught out. Making a claim, even for something minor, and even if you weren't at fault, can affect your insurance costs in two ways.

First, you may lose part or all of your no-claims bonus (also called a no-claims discount). This is a discount applied to your premium that builds up over years of claim-free driving. A single claim can reset it by one or more rating levels, and the cost of losing that discount can easily exceed $200 to $500 per year depending on your insurer and vehicle.

Second, some insurers will simply increase your base premium at renewal if you've made a claim, independently of the no-claims bonus system. The increase varies between insurers and is rarely disclosed clearly upfront.

The combined impact can last two to three years. A claim that saved you $600 in repair costs could end up costing you $1,000 or more in additional premiums over that period.

Not at fault claims: are they really free?

If another driver caused the damage and you have their details, many insurers will waive your excess for a not at fault claim, but this isn't universal. Check your policy carefully.

Even with a waived excess, a not at fault claim can still affect your no-claims bonus depending on your insurer and policy. Some policies specifically protect your bonus in not at fault situations; others don't. The Product Disclosure Statement (PDS) is where you'll find the answer.

If you have the other driver's details and they're insured, you also have the option of going directly through their insurer rather than your own, which keeps your own policy completely clean. This takes more effort but can be worth it for larger repairs.

When claiming is clearly the right call

There are situations where claiming is straightforward and the right decision:

• The repair cost significantly exceeds your excess, say $5,000 in damage with an $800 excess
• The damage involves safety critical components like airbags, crumple zones, or ADAS sensors
• The other driver was at fault, your excess is waived, and your no-claims bonus is protected
• The vehicle may be a write-off. Always go through insurance for total loss situations
• Multiple vehicles or third-party property are involved

When paying out of pocket makes more sense

And situations where skipping the claim is often the smarter move:

• The repair cost is close to or less than your excess
• The damage is minor and cosmetic, a small scratch, scuff, or door ding
• You've recently made another claim and don't want to compound the premium impact
• You're planning to sell the car soon and a clean claims history may not matter to you
• You've built up several years of no-claims bonus that you'd prefer to protect

One thing you need before you can decide anything

None of this works without knowing what the repair will actually cost. Without an independent figure you're making this decision blind.