Insurance protects you from having to pay out money from your pocket when an accident happens. But is it in your best interest to file a claim? You may answer “yes’ to this question but that is not the way the industry sees it.

 It does not matter whether you are at fault or not but mainly on the number of claims you filed in the past. This can cause your insurance rates to increase. The larger the number of claims you file the greater the likelihood your rates will rise. The insurer may even discontinue your policy. However, if the filed claims are a direct result of your fault, definitely your rate will rise. If it is not your fault your rate may or may not rise. If you get hit from behind when you car is parked and is not your fault, your rate may or may not result in a rate increase. The insurer considers mitigating circumstances when evaluating rate hikes like the frequency of natural disasters, earthquakes, floods, hurricanes—and even low credit rating. All these can cause your rate to rise. Even if the latest claim you made was not your fault can cause your rate to rise.

 Claims like dog bites, slip and fall, water damage, mold infestation, and personal injury claims are suspicious to insurers. These claims have a negative impact on your rates. They can affect your policy renewal as the insurer may not be willing to provide coverage because of them.

 You may think that a speeding ticket would definitely cause your rate to go up but it may not, as insurance companies forgive the first ticket. Minor car accident and other small claims against your home owner’s policy are not considered.

 Frequent filing of claims can cause your rates to increase from 20-40% overall. Although these rates can remain in effect for years the rate hikes can vary depending on the insurer. Some insurers keep their term for two years while others may last for five years. If you are a marginal case and your insurer drops your policy you will have to endure much higher rates with higher premiums.

 Rates hikes are not a hard and fast rule by insurance companies because of car insurance claims. They vary from company to company. Any claim may present a risk to your policy so the first step is to understand the coverage on your policy. Review your policy carefully and ask your insurer to clarify any doubts you may have about coverage—while you are getting your policy. This knowledge will help you to figure out the effects of claims on your policy.

 Whether you have a claim or not, it would be best for you to minimize the number of claims you make on your policy to prevent any substantial rate increases. One good rule to adopt is only to file a claim when you have a catastrophic loss.

 Bear in mind that even if you did not have any claims against your policy, the insurer does not have an obligation to renew your policy.

 One word of caution, however, is that although you have been paying all premiums on time like clockwork, it does not mean that you may file as many claims as you want. The insurance industry does not operate that way.

 So, in order to avoid rate hikes, review your policy and the industry practices ahead of filing any car insurance claims.