How to Keep Minor Accidents from Becoming Major Problems

We’ve all been there—or probably will be at some point: The car in front of you comes to a sudden stop, too quickly for you to avoid knocking into it. No one’s hurt, thankfully, but their car is worse for the wear with a broken taillight and bent exhaust pipe.

Your first reaction is to apologize and say “I’m sorry”. Knowing you were probably a little too close for comfort, you also say, “I’ll take care of it.” You’ve always heard that it’s better to handle small accidents yourself and avoid a potential increase in your auto insurance premiums.

But what looks like a minor issue now could easily turn into a major problem later. You could get a call saying that the car’s entire exhaust system needs to be replaced because of the accident. Or you could be served with legal papers demanding damages because the driver suffered neck injuries.

Such post-accident surprises are even more likely for affluent individuals, whose deep pockets will be suggested by the make and model of their car – and confirmed with a quick internet search.

Flash forward: In court, a smart plantiff’s lawyer portrays your well-meaning apology as an admission of fault. Even worse, if the accident wasn’t reported promptly to your insurer, the carrier may not cover your liability for damages or the cost of the lawyers to defend yourself.

For example, a man who was in a minor accident, that he thought only cause a skinned knee, was recently sued for more than $50,000 in damages. He waited 21 months after the accident to report this seemingly minor collision to his insurance carrier. Not to mention, the court said the insurance policy required notice of every accident, no matter how small.

To avoid any misunderstandings, not to mention unpleasant surprises, here is a simple-but-specific set of recommendations for anyone involved in a minor car accident.

1. Determine if anyone is hurt. If so seek the appropriate medical help immediately.

2. Don’t leave before exchanging information. First, because it’s a crime to leave an accident scene and second, because the person you hit could later claim that you left without taking any responsibility. But the less revealing information you provide the better. So provide phone numbers instead of trading business cards, and give your personal email rather than one from work.

3. Be cautious with your wording. Even the most casual, “sorry” could be seen as an admission of fault by the courts. Even worse: “I wasn’t paying attention.” Instead, we recommend expressing your concern by asking, “Are you okay?” without commenting on your own actions.

4. Don’t volunteer to pay out of pocket. Even if that’s what you eventually decide to do, being eager to “just write a check” may signal more than wanting to avoid the hassle of filing a claim; it may tell the other party that money is not a big worry for you. A phrase like, “I’ll talk to my insurance agent and get back to you soon,” is all you need to or should say.

5. Consider calling the police. This may seem unnecessary, but a police report can prove valuable in he said/she said cases. This is especially important in a litigious place (like New York City) or if there is a question of who’s at fault, such as a sideswiping incident.

6. Photograph everything. We recommend photographing your car and their car along with the broader scene. Don’t forget to take a picture of their driver’s license, insurance card, registration and license plate. The more you can document the better.

7. Call your insurance broker or agent first. That is, before you call your insurance carrier. (Some carriers will cancel policies after a series of what they perceive as small claims.) Your broker can tell you what the next steps are given your circumstances. We might, for example, recommend that you write a check while notifying your carrier about the accident and explaining that no claim will be submitted. Doing this won’t guarantee your rates will stay the same, but a small increase might be more financially advantageous than having to pay a big lawsuit settlement. Likewise, an experienced broker can help make your best case to the carrier if there’s a risk of a rate increase.

Whatever the circumstances of your next fender bender, your actions in the immediate aftermath of the incident can have significant financial and legal consequences. So before you jump to conclusions on how to handle what seems like a small collision, call your broker and get their advice on the next proper steps. A quick phone call can prevent a minor accident from turning into a major problem down the line.