Is It Better to Pay Out of Pocket or File a Claim?

​Filing an insurance claim isn’t always the best move.

​Learn when it’s smarter to pay out of pocket and how claims may impact your rates.

To File or Not to File?
One of the most common dilemmas in insurance is whether to file a small claim or cover it yourself. While insurance is designed to protect you from major losses, filing frequent or minor claims can have unintended consequences.

When You Should Consider Filing a Claim

• The damage exceeds your deductible by a significant amount
• It involves liability to others (e.g., guest injury, at-fault car accident)
• There’s structural damage to your home or total vehicle loss
• You need access to legal or repair resources through your insurer

When Paying Out of Pocket Makes Sense

• Minor home damage: Like a $600 fence repair with a $1,000 deductible
• Small windshield cracks or cosmetic dents
• Incidents that won't affect third parties and are under or near your deductible

Claims Can Impact Your Premiums
Most carriers use your claims history to calculate future premiums. Too many claims—especially within 3–5 years—can label you as high-risk.

• Home Insurance: Even water damage claims under $5,000 may raise rates
• Auto Insurance: At-fault accidents and frequent small claims may trigger surcharges

State-Specific Rules
Some states restrict non-renewals due to one claim, while others don’t. Speak with your agent to understand how your state laws affect your renewal options.

Carrier Insights

• Safeco Insurance and Progressive evaluate claim frequency and severity.
• Allstate uses tools like Claim Rater to assess risk after a claim.
• Some carriers even deny renewal after multiple small claims.

Pro Tip: Consider a Claim-Free Discount
​Many insurers offer discounts for customers with 3+ years without a claim. Filing unnecessarily can cost you this long-term savings.

Disclaimer: This content is for educational purposes and not a substitute for personalized advice. Always speak with your licensed insurance advisor before making any claims decisions.