How An Auto Accident Can Hurt Your Credit

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The National Safety Council (NSC) estimated that the total cost of deaths, injuries, and property damage related to automobile accidents in 2016 totaled $432.5 billion. As if being hurt in an auto accident isn’t bad enough, you may be doubly challenged by the financial implications. Not only may you miss work (and a paycheck or more), but you may also find yourself responsible for unexpected medical bills. As with any other type of debt, when not handled promptly and appropriately, your credit can take a big hit. Get the facts regarding what does and does not affect your credit when you are in an automobile accident.

Are Auto Accidents Reported to the Credit Bureaus?

No, auto accidents have no bearing on your credit history or creditworthiness. Auto accidents are not reported to credit bureaus or listed anywhere on your credit report.

Can an Auto Accident Ruin My Credit?

In and of themselves, auto accidents do not affect your credit one way or the other. It is only the debt associated with auto accidents that can get you into trouble, if:

  1. You have both auto and health insurance requiring coordination of benefits that somehow gets complicated.
  2. Neither an auto nor health insurance policy covers your medical bills, leaving you personally responsible for the debt, but you fail to make acceptable payment arrangements.

Either way, the worst-case scenario is your unpaid medical bills get sent to a collection agency.

What is Coordination of Benefits?

If you have both auto and health insurance through different companies, then coordination is required between them to determine which policy has primary responsibility for the debt, as well as what (if any) coverage the other policy may provide.

Possible Complications During The Coordination of Benefits Process

During the coordination of benefits process, there is potential for trouble if:

  • You do not submit your claim in a timely manner. Insurance companies may use a delay like this to technically (and legally) avoid responsibility.
  • One or both of your insurance companies denies responsibility for the claim.
  • One or both of your insurance companies drags out the claim process.
  • One or both of your insurance companies makes clerical errors in the claim/payment process.

Worst-case scenario, these complications mean your medical bills go unpaid by either of your insurance companies.

Will My Health Care Provider Allow a Grace Period for Payment While the Insurance Companies Sort Out Liability?

While it’s no surprise to health care providers that auto accident coverage can be a complicated process, there is no set, formal grace period you will be allowed while your insurance companies sort things out. That said, your personal contact with their billing department can go a long way. Keep them in the loop of what’s happening and you could buy yourself some time. Frequent contact throughout the process can help ensure you’re not sent to a collection agency unexpectedly and can, instead, make necessary payment arrangements to keep you in good standing.

How to Prevent Complications Associated with the Coordination of Benefits Process

If you have both auto and health insurance:

  • Give your health care providers complete information on both policies.
  • As soon as possible, file a claim with both your auto and health insurance companies, being sure to get a claim number from each insurer.
  • As soon as you have filed a claim with both insurance companies, give your health care providers both claim numbers.
  • On a regular basis, for as long as is necessary, check in with your health care providers AND your insurance companies to see how the process is coming along, acting as a facilitator of sorts to help ensure nothing slips through the cracks.

If the Claims Process is Taking Longer Than My Health Care Providers are Willing to Wait, How Can I Avoid Being Sent to Collections?

If you have insurance coverage, never give up the claim. Keep at it and keep on them, often! At the same time, keep your health care providers in the loop, making every effort you can to delay collection. If and when it can be delayed no more, and the claim has yet to be settled, it is in your best credit interest to bite the bullet and make a payment arrangement if it means keeping you from being turned over to a collection agency.

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