What to consider when deciding whether or not to file an auto insurance claim

We have auto insurance so we can file claims and let the insurers take care of the rest, right? So whenever something bad happens that affects our vehicles or ourselves, we can flip the switch and reap the benefits of protection.

Not quite. Insurance gives you the power to make claims, yes; but that power isn't as limitless as, say, a monthly transit pass that gives you as many rides as you desire. You could make all sorts of claims just for the sake of it, but, as we will get to, that would come to your detriment.

Before filing an auto insurance claim, you should always evaluate the situation to determine whether or not the claim would be worthwhile. Sometimes it's a no-brainer. If you've had a brutal collision and your car is totalled, you shouldn't think twice about filing—just go ahead and do it. But it's not always that simple. And when it's not, this is what you need to consider.

Is accident forgiveness in play?

Accident forgiveness is to car insurance what mulligans are to golf. They are fallback options that can get someone out of a bind, one time and one time only. With accident forgiveness, drivers can report and claim damages to their insurers without having to worry about their premium rates going up. Though it is a benefit that is paid for, the amount one pays for it is relatively meager compared to what it might cost to deal with raised rates going forward.

What is your claims record like?

The downside to making claims is that they could have financial consequences for years to come. If you make one, you're almost certainly going to see your rates go up. The extent to which that happens will depend on the severity of the event, but many drivers are shocked to see how high of a jump it can be for seemingly minor expenses. Policyholders who have filed one or multiple claims before should be wary of filing another unless the situation truly warrants it. 

How high is the deductible?

If you're set on filing a claim, perhaps you may be dissuaded after taking a look at the deductible on your policy. This figure, which is the amount you must pay out of pocket before the insurance company will cover the rest, may actually end up approaching (or—gulp—surpassing) what the repairs would cost you to pay for on their own. When that's the case, you're probably just better off doing that.

Was the car damaged in an accident?

There are other considerations to make if your car was damaged in an accident, but that initial distinction is a pretty important one to set. In circumstances where your car was damaged in some non-accident way—think tree branches falling, an errant baseball, etc.—insurance companies are more likely to take pity and raise rates very little for making a claim, if at all. So, assuming none of these other factors could complicate things, this could be a good time to make a claim.

Were you at-fault in an accident?

Should this be the case, you'll almost certainly be better off making a claim. It won't necessarily be great news for your rates if you end up having to cover your and another driver's damages, but it's better than the alternative, aka a lawsuit.