When Should You File a Car Insurance Claim?

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Car Insurance
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Wondering when to file a car insurance claim? Money expert Clark Howard has a specific formula he suggests you apply to see if getting your insurance company involved is worth it or not.

Here’s Clark’s Rule for Using Car Insurance

Filing a car insurance claim over something frivolous — like a broken mirror or a cracked windshield, for example — is a real whammy for your wallet. It will almost certainly raise your premiums, sometimes by up to $600.

So the real purpose of insurance is for the big things in life, not the minor fender bender. Here’s how Clark puts it:

“We all need to think of auto insurance as going back to its original purpose: For catastrophic circumstances only!”

Apply This Test Before Filing a Car Insurance Claim

We’ve already established that insurance is best used to make you whole in catastrophic instances only. But the reality is you may be tempted to file a car insurance claim no matter what happens.

“For most people, the question of when to involve insurance is a practical matter of your resources,” Clark says. “When you file often is when you can’t absorb the loss out of pocket on your own.”

But as a general, it’s better to pay out of pocket when you can. That’s why the consumer champ has what he calls his $500 rule:

Whatever your deductible, you should always try to pick up the tab for $500 above that before getting insurance involved.

  • Let’s say you have a $500 deductible. In that case, you should only file a claim when the auto body repair bill goes above $1,000.
  • If you have a $1,000 deductible, any repair bill over $1,500 would warrant a claim.

TIP: Always opt for at least a $1,000 deductible on your auto insurance policy. You’ll lower your monthly premiums because you’re shouldering more of the potential financial responsibility yourself. Plus, having that higher deductible to pay before coverage kicks in will deter you from making petty claims.


Here’s When You Should NOT File a Car Insurance Claim

Speaking of petty claims, there are a few instances when Clark says filing a car insurance claim isn’t called for:

  • Small incidents like a cracked windshield or a broken mirror
  • After a weather episode where your vehicle is hit by debris and causes minor surface damage
  • Calling your insurer’s roadside assistance — that, unfortunately, may be treated like a claim

That last item may surprise some people. But the truth is some auto insurers that offer roadside assistance treat your use of it as an at-fault claim and put that through on your C.L.U.E. report.

Your C.L.U.E. reports stands for Comprehensive Loss Underwriting Exchange. It’s a shared database insurance companies report to when you make a claim.

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“If you have too many claims on your C.L.U.E. report, that could make you radioactive to other insurers for three years, effectively leaving you stuck with your current insurer without the ability to comparison shop,” Clark says.

So remember this rule: Never get roadside assistance from your own insurer. Clark recommends getting it from AAA or elsewhere.

Final Thought

When sustaining some kind of damage to a vehicle, it’s almost everyone’s default position to think they should immediately file a claim.

But if you just bump your deductible up to $1,000, you won’t be as tempted to make a claim in the first place — and you’ll benefit from lower premiums on your car insurance policy.

Meanwhile, if you’re looking for other ways to hold down the cost of premiums, be sure to see our article on how to save money on car insurance. We’ve got 10 other ways that can help keep more money in your pocket!

Finally, you’ll also want to have a look at our guide to the best and worst auto insurance companies.

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