Should You Make an Insurance Claim?

In contrast, weather-related claims rarely result in premium hikes, and many states prohibit insurers from raising rates for that reason. (Insurers can, however, raise rates on all of their customers in an area experiencing new and more destructive weather.)​

You’re more susceptible to rate hikes if you have a history of filing claims, or if previous owners filed multiple similar claims on your home. Insurers can see the claims record on both your auto and homeowners insurance via what are known as CLUE reports. (That stands for Comprehensive Loss Underwriting Exchange.) You can order your CLUE report for free.

2. Determine what’s affordable

When home or auto damages are only slightly more than their policy’s deductible, most people choose not to file a claim. The total cost they are willing to pay before calling in the insurance company is known, in industry parlance, as a “pseudo-deductible.” It includes their actual deductible and the extra amount they are willing to eat. How high should you go? Derek Tharp, an assistant finance professor at the University of Southern Maine, who has studied pseudo-deductibles, suggests that whatever the actual deductible may be, an ideal pseudo-deductible for homeowners ranges from $500 to $1,500. You may want to go higher if you can afford to.​​

3. Notify your insurer

Even if there’s no damage or injury, tell your car insurer about an accident. “I always report any auto accident unless I back into my own home,” Wilson says. Here’s why: You might tap somebody’s bumper and not see any damage to either car. Later on, though, the other driver might report an injury or a bigger car problem. In such a situation, alerting your insurer promptly may protect you from a scam or from the denial of a claim because it wasn’t filed properly. In many states, insurers can’t raise premiums based on reports of an accident without a claim, unless you were cited for a traffic violation; even in other states, insurers are unlikely to raise your rates just because you alerted them.​

You have other ways to avoid or limit rising premiums. Several auto insurers, including Farmers, Geico, The Hartford and Progressive, offer single accident forgiveness. You may also be able to lower your premiums via a higher deductible or a driver’s ed refresher course, or by putting more safety gear in your car or home.​

As for my daughter and son-in-law? So far, so good. They filed a claim, which their insurance company investigated and paid quickly. And their policy was renewed … without a rate hike.

Linda Stern, former Wall Street editor for Reuters, has been covering personal finance since the 1980s.