Fear Factor: Why Consumers Choose Not to Claim

by Chasidy Rae Sisk

Something disconcerting is happening in collision repair right now. Drivers are still distracted, cars are still crashing, and traffic violations are actually up, not down. Yet, fewer damaged vehicles seem to be making their way into collision repair shops as claims quietly disappear.

Collision claim frequency has declined year-over-year. In the third quarter of 2025 alone, collision coverage claims fell more than 10 percent compared with the previous year, after falling 11 percent the preceding quarter, as reported by the Independent Statistical Service Inc.

At first glance, that sounds like good news. Fewer crashes, right? Not exactly. According to industry data, the roads aren’t suddenly safer. What’s actually changing is something far more complicated – and far more human: fear. But consumers aren’t more fearful of getting into an accident; they’re afraid of the bill.

For decades, the formula was simple: crash the car, call the insurer, take it to a shop to be repaired…however, the economics of that equation have changed dramatically.

Auto insurance premiums surged in recent years, climbing about 10 percent in 2024 alone after a 15 percent jump the year before. High deductibles followed close behind. In many markets, drivers now carry deductibles of $1,000 to $1,500 – or even more! Suddenly, filing a claim for moderate damage doesn’t feel like a safety net; it feels like a gamble.

The most dramatic shift is happening in relation to instances of less severe damage. Repairable claims under $2,000 dropped from 41.5 percent of appraisals in 2019 to just 25.5 percent through June 2025, according to CCC Intelligent Solutions’ 2025 Q3 Crash Course Report (see cccis.com/reports/crash-course-2025/q3). “With higher deductibles and the potential for claim filing to affect insurance rates, consumers are simply not filing smaller claims, choosing instead to pay out-of-pocket or live with the damage. This discretionary filing behavior is a direct consequence of financial pressure.”

Lingering inflation, elevated interest rates and higher vehicle prices are creating these added strains on the public’s finances, CCC explained. “This is evidenced by record levels of auto loan debt, rising delinquencies and repossessions, and a marked shift in behavior, including postponing large purchases, downgrading insurance coverage and selecting higher deductibles, which in turn is depressing the frequency of smaller auto insurance claims.”

So, the reduced number of small repairs coming in the doors isn’t an indication of fewer collisions; instead, many drivers have stopped reporting the damage to their insurers. Although some vehicle owners may elect to pay out-of-pocket, others delay repairs, while many decide to simply live with the damage, which they view as insignificant or cosmetic since they don’t understand the complexity of today’s vehicles. As a result, the claims that are filed have become increasingly complex and expensive and often include “higher rates of prior unreported damage.”

But this reluctance isn’t merely related to higher deductibles; drivers are also looking forward and calculating what today’s claim might mean for tomorrow’s premiums. Most consumers are convinced that filing a claim will trigger premium increases at their next renewal, and with insurance already so costly, they are more apt to decide that it’s in their best interests to ignore the damage altogether; it’s safer to drive a damaged vehicle than to deal with the impact to their finances. Essentially, drivers are performing their own risk assessment and deciding to reserve their insurance for catastrophic events, rather than that “minor” fender bender.

This shift is visible to collision repairers with repairable claims dropping over 10 percent through August 2025 compared to the same time period during the previous year. Shops aren’t just seeing fewer jobs; they’re contending with a different mixture of work entering their doors. Historically, shops operated on a pyramid of repairs; the majority of work consisted of high-volume small jobs, with a few mid-range collision repairs and a handful of jobs requiring complex structural work. But that pyramid is now flattening as the number of quick bumper repairs, minor fender hits and parking lot scrapes rapidly shrinks, while large, complicated repairs are deemed total losses, leaving only the middle level intact.

While claim frequency is declining, repair complexity is doing the exact opposite. Nearly every vehicle actually being brought into shops is equipped with ADAS, requiring calibrations. They may also involve structural aluminum components which require specialized training and equipment…or the damaged vehicle is a hybrid or EV which necessitates even more careful consideration during the repair process.

Although fewer vehicles are entering the repair stream, the heightened complexity of each job creates a strange contradiction for repairers – workload feels heavy because each repair takes longer, yet overall vehicle count continues declining.

Meanwhile, total losses create another layer atop all this confusion. This is largely driven by the number of older cars still being driven. As of last May, S&P Global reported the average age of light vehicles had risen to 12.8 years (14.5 years for passenger cars and 11.9 years for light trucks), up by two months from the previous year – and a full year older than the average age of 11.8 reported in 2019.

Simultaneously, used vehicle values have softened, and repair costs remain higher, creating a combination that pushes more vehicles past the economic repair threshold, resulting in more total losses. Through July 2025, CCC reported that total losses accounted for 23.4 percent of non-comprehensive losses and 22.6 percent of all loss categories, up from 22.4 and 21.6 percent (respectively) in the preceding year.

Each total loss is more than just a lost repair – these are often the larger structural jobs that sat on top of the pyramid, so as this layer of repairs reduces and the bottom level of the pyramid shrinks due to consumers’ fears of financial impact, shops are left with the mid-range repairs that produce mediocre profits but require considerable effort.

Behind all of this is a broader economic reality: consumers feel squeezed, vehicle prices remain historically high, financing costs are still elevated, and insurance premiums have jumped dramatically in the past few years. When households start triaging expenses, cosmetic vehicle repairs often fall to the bottom of the list.

The result is something collision repairers rarely faced in previous decades: delayed repairs. A dent that would have been fixed immediately five years ago now waits months, even years…or never gets repaired at all.

As insurance claims decline, shops are seeing a shift toward customer-pay work; many consumers feel forced into this situation. After all, if their deductible is $1,000 and the estimated repair will cost $1,400 (but likely cause their insurer to increase their premium in several months), the math becomes obvious. File the claim and risk higher premiums, or just pay the shop.

Many drivers are choosing the second option, creating a trend that is quietly reshaping shop operations. Front office staff increasingly find themselves explaining estimates directly to consumers rather than adjusters…and for some repairs, the insurer is no longer even part of the conversation – except insurance companies are also navigating these same consumer behavior shifts.

Fewer claims may sound like good news in theory, but it introduces new dynamics. Higher premiums become harder to justify when policyholders rarely use coverage, and customer satisfaction ratings tank when deductibles consistently exceed payouts – when a policyholder pays a $1,000 deductible while their carrier cuts a check for a mere $500, the benefit of carrying insurance appears, well, less beneficial.

The reduced claim pool makes data trends harder to interpret. For example, some data indicates higher satisfaction with claims, but that doesn’t necessarily mean the system is healthier; fewer claims means fewer interactions…and less cause for complaints.

Collision repair shops are accustomed to evolving to meet technological demands and insurance models, yet this current shift is different because it’s behavioral, and that makes it challenging to predict what will happen next.

The next stage of this trend will likely depend on several financial factors: Rising deductibles are likely to result in falling claims, while ADAS and electrification contribute to vehicle complexity and higher repair costs, leading to more total losses as older vehicles cross that threshold. Yet, if those economic pressures ease, some deferred repairs may make their way into shops.

Contrary to popular belief, collision repair shops do not depend on crashes; they depend on reported crashes. Drivers are quietly rewriting that rule. A decade ago, a minor collision almost automatically turned into an insurance claim, but now, that same incident often becomes a household budget decision. Fix, delay or ignore the damage?

For collision shops, the result is a repair pipeline that is smaller, more complex and increasingly unpredictable. Cars are still crashing, but claims are disappearing. And until consumer confidence returns – or deductibles come down – that quiet shift may become one of the most significant structural changes the collision repair industry has faced in decades.

Despite these challenges, this shift also uncovers a powerful silver lining for the collision repair industry: the opportunity to forge deeper, more direct relationships with the people behind the wheel. As the customer-pay segment grows, shops are no longer just service providers for insurance carriers; they are becoming trusted advisors to their local communities.

This new landscape rewards the shops that prioritize transparency, education and technical excellence. While the volume of minor claims may be lower, the value of the work actually entering the shop is higher than ever. Modern repairs require a level of sophistication that positions professional shops as high-tech centers of expertise. This transition allows repairers to showcase their true craftsmanship and safety-first mindset directly to a more engaged consumer.

Furthermore, economic cycles are naturally fluid. As financial pressures inevitably ease and consumer confidence begins to rebuild, the industry is likely to see a surge in demand as drivers finally decide to address those deferred repairs. In the meantime, the industry is becoming leaner, smarter and more focused on the retail experience. By evolving from a claim-driven model to a consumer-centric one, collision repairers are not just surviving a structural shift – they are building a more resilient, professional and personalized future for the entire trade.

Want more? Check out the May 2026 issue of New England Automotive Report!