You pay your premiums, but when your car is damaged, you balk because you fear a claim will mean higher insurance rates. Here’s what you need to know.

Have you ever been hesitant to tell your car insurer about minor damage to your car because you were afraid your rate would go up?

The Insurance Information Institute reports that the average expenditure for car insurance has steadily increased each year since 1999. If no other party is involved, you may be tempted to keep quiet about a minor claim.

But why have insurance if you can’t use it when you need it?

“People are often too petrified to file a claim because they think they won’t be able to afford a premium increase,” says Eric Tyson, the author of “Personal Finance for Dummies.”

We all want to be accident-free, but “it’s important to remember that filing an insurance claim isn’t necessarily bad,” he says. “Insurance is there to protect you, and it makes good financial sense to use it when necessary.”

What t do after a car accident

The first part of the claims process is pretty straightforward.

“In an accident, an adjuster will be assigned, and, based on the specific factors of the claim, they may talk to you and they may work with the other driver involved. They also might look at police reports, take a look at your car and look at the car of the other individual involved in the accident,” says Mike Siemienas, a spokesman for Allstate in Northbrook, Ill. Then, the adjuster will work with you to ensure any necessary repairs are paid for and completed.

What happens after the claims process varies. If it is determined that you are at fault, your rates could go up or you could lose coverage altogether. Here are six things you need to know about car insurance both before and after you file a claim:

1. Know the difference between cancellation and non-renewal.

There’s an important distinction between an insurance company choosing not to renew a policy versus canceling one. According to the Insurance Information Institute, a company can’t cancel a policy that’s been in force for more than 60 days unless one of the following has occurred:

• The premium has not been paid.

• The insured person fraudulently filled out the insurance application.

• The policyholder’s driver’s license has been revoked or suspended.

However, insurance companies can decide not to renew a policy once the existing term ends.

You must understand that companies generally write policies that are renewed every six months or one year If you have an accident where you are at fault, and you’ve had previous claims in the last three years, your insurer might decide not to renew your policy.

That’s a general guideline, but  there are no firm rules about when a company can choose not to renew.

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