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So you’ve had an incident. Maybe not a major one, but it happened and you’re in the position of having to weigh whether you should be on the phone to your insurance company…or just handle the situation and pay for it yourself.
Finding the balance between paying out of pocket and potentially paying a higher insurance premium for years can be a difficult decision.
A small insurance claim could be a wide range of scenarios across the spectrum of insurances: For car insurance or truck insurance it could be a cracked windshield or a fender bender and dented bumper.
For home insurance it could be minor storm damage to your siding or shingles.
For renter’s insurance it could be minimal damage from a break-in.
Generally, a small insurance claim involves damage that costs close to, or less than, your deductible to repair.
No matter the scenario, chances are at some point you’ll need to make a decision as to whether you should pay for the damage out of pocket or file the claim and risk your insurance premiums going up for the next several years. How much a claim affects your premium, and for how long, can vary depending on your insurer, state, policy and claim history.
Bosworth & Associates in Tyler, Texas is a trusted local insurance agency whose team has experienced all aspects of small insurance claims. Before filing a claim, it’s important to do the math and weigh both the short and long-term benefits and drawbacks of filing a claim or not. Too often people file a claim without taking the time to determine the long and short-term costs. Too often people file a claim without taking the time to determine what they’re actually getting from insurance versus what filing the claim could cost them later.
However, if you do the math and the amount you’ll receive from insurance is fairly small compared to what you could end up paying through higher premiums over the next few years, it might make more sense to pay out of pocket and handle the situation outright.
And don’t forget to add in the cost of your deductible when you’re doing the math. You’ll need to compare the cost of repairs, your deductible, what insurance will actually pay for repairs, and what the possible long-term impact could be if you file a claim.
Your deductible is also a good gauge to help you determine if you should pay out of pocket in the case of an incident. If your deductible payment, subtracted from what you’ll receive from insurance, leaves little left over to cover the actual cost of repairs, it might not be worth it to file a claim.
You don’t need to make the math overly complicated. Start with three things: the actual cost of the damage, your deductible and what your insurance would pay.
First, get a real estimate for the repair rather than trying to guess what it might cost. Once you have that number, subtract your deductible. What’s left gives you a better idea of how much you would actually receive from insurance if you filed the claim.
From there, consider how that amount compares to the possibility of paying a higher premium over the next several years. Many insurers look at your claim history over a period of around three to five years, although exactly how a claim affects your premium will depend on your carrier, state, policy and the type of claim.
If what insurance would pay after your deductible is relatively small, a possible premium increase over the next few years could outweigh what you save by filing. On the other hand, if there’s a large gap between your deductible and the actual cost of the damage, filing may make considerably more financial sense.
Every insurer weighs claims differently, so think of this as a starting point rather than a guarantee. Your insurance agent can help you look at the numbers for your specific policy before you make a decision.
There’s one more thing to check before filing: whether your policy includes a claims-free or accident-forgiveness discount. Some insurers offer discounts for going a certain amount of time without a claim. Filing even a small claim could affect that discount or reset the clock, which can change the math too.
Swipe left/right on the table below to see all columns →
| Scenario | Coverage | Deductible | Damage / Repair Cost | Insurance Pays | Your Cost If You File | What It Might Look Like |
|---|---|---|---|---|---|---|
| Auto – Fender Bender | Collision, $30,000 limit | $1,000 | $6,200 | $5,200 | $1,000 deductible | The damage is well above the deductible. Filing may make sense since paying $6,200 out of pocket is considerably more than the $1,000 deductible. |
| Auto – Minor Damage | Collision | $500 | $900 | $400 | $500 deductible | You’d only receive $400 from insurance. Depending on how the claim could affect your premium, paying the $900 yourself may make more sense. |
| Homeowners – Storm Damage | Dwelling | $2,500 | $3,200 | $700 | $2,500 deductible | Insurance would only cover around $700. Before filing, it’s worth weighing that payout against the possible longer-term impact of having the claim on your record. |
These numbers are only examples. Your actual deductible, coverage, repair costs and claim history all factor into the decision.
Your recent claim history is another important factor when deciding whether to file a small insurance claim.
Insurance companies can use shared claim-history databases, including the CLUE report for home and auto policies, when reviewing your claim history. Many insurers look back around three to five years, although the exact timeframe varies.
And it’s not always just the size of the claims that matters. Frequency can matter too. Two or three claims within a short period, even minor ones, can have a greater impact on your rates than one larger claim filed in isolation.
If you’ve filed an insurance claim recently, that’s worth considering before you file another one over relatively minor damage.
Premium increases aren’t the only potential long-term consideration either. Multiple claims could lead to a higher deductible, limitations on certain types of coverage or, in some circumstances, an insurer deciding not to renew the policy. That doesn’t mean you shouldn’t use your insurance when you need it. It just means your recent claim history is another part of the equation when deciding whether a small claim is worth filing.
If someone else caused the damage, filing through your own insurance isn’t necessarily the only way to handle it.
Maybe another driver hit your car. Maybe a contractor damaged part of your home. Depending on what happened, the other party’s insurance may cover the repair. Sometimes the person responsible may even offer to pay for the damage directly. Depending on the situation, that may allow the repair to be handled without filing a claim through your own policy.
However, the situation changes when injuries or potential liability are involved.
If someone was injured, or there’s a possibility you could be held financially responsible for what happened, the legal and financial protection provided by your insurance becomes much more important than simply comparing the repair bill to your deductible. What initially looks like a small incident can become much more expensive if medical bills or liability issues come up later.
There are instances where filing an insurance claim is the clear choice.
One of the most important is when injuries are involved, especially if you may be at fault. Medical treatment can continue well after the incident itself, and those costs can add up quickly. Going through the appropriate insurance channels also creates documentation of what happened and gives you the protection provided under your policy.
A total loss is another fairly straightforward example. If the loss is substantial and insurance would cover an amount far beyond your deductible, paying the entire thing yourself may not be realistic or financially sensible.
The same idea applies to major damage. A few damaged shingles and a destroyed roof are very different insurance decisions. So are a scratched bumper and a totaled vehicle.
The decision to file gets more complicated when the damage is minor and the insurance payout would be relatively small. That’s where your deductible, claim history, policy and the actual cost of repairs become especially important.
It depends on the gap between your deductible and the actual cost of the damage, along with how filing could affect your insurance over time. If insurance would only pay a small amount after your deductible, paying out of pocket may make more sense. If you’re dealing with major damage or a total loss, filing is a very different equation.
Insurance companies can consider both how much previous claims cost and how frequently you’ve filed them. Multiple small claims within a few years may have a different effect on your insurance than one isolated claim.
It can, but there isn’t one answer that applies to every claim. Your carrier, state, type of claim and previous claim history can all affect whether your premium changes and by how much.
Start with an actual repair estimate and subtract your deductible. That gives you an idea of how much insurance would actually pay. You can then weigh that amount against the possible longer-term impact of putting the claim on your record.
Generally, a small insurance claim involves damage that costs close to, or less than, your deductible to repair. This could include a cracked windshield, a minor fender bender, a few damaged shingles or minimal storm or break-in damage.
It can. Some insurers offer discounts for going a certain amount of time without filing a claim. If you currently receive one, ask your agent how filing would affect that discount before you make your decision.
If another person or company is responsible, their insurance or a direct agreement to cover the repair may allow the damage to be handled without filing a claim through your own policy. If injuries or potential liability are involved, however, it’s important to consider the legal and financial protections provided by your own insurance as well.
Knowing whether to file a small insurance claim or pay out of pocket can be confusing, and each scenario is different. Before making a decision, it’s important to understand your premiums, deductible, claim history, available discounts and how your individual insurer handles claims.
And if you’re not sure how the numbers shake out, you don’t have to figure it out on your own. Your insurance agent can help you look at your policy, deductible and coverage before you make the decision.
Contact your local East Texas insurance agency today and do your due diligence before filing a claim.
