While auto insurance companies insist they want to know about the smallest accident, it's clear that if your deductible is more than the cost of your repairs, you are better served to pay the bill yourself and leave your claim unreported.

There is no law that requires you to report an accident to your insurance company, and you should remember that every time you file a report with your auto insurer, even if the damage is less than your deductible, it goes on your insurance record. Joe Annotti from the National Association of Independent Insurers (NAII) says insurance companies want to know about accidents even when repairs cost less than your deductible so the company is protected against possible fraudulent claims from you. "They want to know in case you file a future claim for damages that really happened in an earlier accident," he says. Annotti says your premiums are affected only when the company pays a claim.

Don Griffin, also of the NAII, says while small claims won't affect your individual premiums, insurance companies depend on information provided by policyholders to determine overall premium rates that the company will charge to its pool of customers. "It distorts the [big] picture the [auto insurance] companies get if small claims constantly go unreported," he says. But what is good for the insurance industry isn't always good for you.

Points to consider

So when should you file a claim with your car insurance? Common sense says if the repairs cost less than your deductible you're better off paying for them on your own and keeping the story to yourself. The wisdom that says take a higher deductible on your insurance to lower your rates extends to this scenario. Take the money you save on the lower rates and deposit it into a savings account. When an accident happens, you'll have the money for repairs even if the cost is slightly more than your deductible.

If you already have a speeding ticket on your record, check with your state's department of insurance to find out what its regulations are on nonrenewal. If filing a claim for an at-fault accident, in addition to your previous ticket, would make you a mark for nonrenewal, think twice about filing.

There is a caveat: "If there is another car involved, or if there is someone else in the car with you, you definitely need to let your insurance company know about the accident," says Griffin. You can never be sure if a passenger or another driver will file a claim on your insurance, so you're better off making sure your side of the story gets on record with both the police and your insurer.

In addition, because injuries are not always immediately apparent, you should report an accident in case you sustain injuries that show up a day after the accident and need medical treatment.

Sgt. J. Paul Vance of the Connecticut State Police says these accidents should be reported to police because it provides anyone involved in the accident a professional, neutral, written account of the accident. It also provides your insurance company documentation of the accident, including time, date, conditions, injuries, if any, and responsibility. "You should always contact the police if you're involved in an accident," says Vance.

What the insurance company sees

Once you contact your auto insurer, be prepared to have the information remain in your file and dog you if you change insurance carriers. Auto insurers share information on policyholders' histories. But when the damage is extensive, it's appropriate to take advantage of the insurance you've paid for.

"We're in the business of paying what we owe," Dave Hurst of State Farm says. "If we owe you money for part of your repairs, we'd like to know so we can pay you." State Farm evaluates accidents and physical property damage on a case-by-case basis for potential premium increases. Many insurers, including State Farm, will also grant you one waiver of either a first accident or a first moving violation.

"We look at chargeable accidents," Hurst says. "We look at claims that are a result of damages caused by you in some way. Your rates won't necessarily go up every time you file a claim. It depends on the circumstances and your history with the company."

Hurst says he understands that people hesitate to file a claim, but there is one circumstance in particular that he warns against: stockpiling comprehensive claims. For example, waiting to file a claim until your car has been damaged by two hailstorms may seem to make sense, but insurers watch for inordinate repair estimates for comprehensive claims.

Although insurance industry insiders won't say as much, the trend toward nonrenewals and tighter restrictions on what is covered across the industry suggests you should use your car insurance like your home insurance, for expensive damage, and plan ahead to pay out of your own pocket for the smaller repairs.

Nonrenewed after one accident

Jackie Middleton of New Jersey carried both her home and car insurance with Allstate for 18 years. In January 2002 her car slid on an icy patch after a heavy snowstorm, slamming into a concrete barrier. Police called to the scene wrote a report of the accident in which nothing about Middleton's driving was faulted.

Middleton filed a claim with Allstate for the damage to her car. The claim was resolved and damage to the car repaired. But in February she received an unexpected notice from Allstate: It was not renewing her auto insurance.

The company said the accident had been her fault and resurrected a moving violation from four years ago, claiming Middleton has points on her license, but the New Jersey Department of Motor Vehicles says it doesn't show any points on her record.

The catch is that New Jersey law prohibits auto insurers from nonrenewing a policy unless the insured or operator under the policy has at least two at-fault accidents or moving violations within the last five years. Once Allstate decided Middleton was at fault for the accident on ice, she became a target for nonrenewal.

"I have had auto insurance all of my 18 years of driving and never needed it or filed a claim. Now that I needed it, I'm being abandoned," says Middleton. Though she's filed an appeal with the New Jersey Department of Banking and Insurance, she realizes the process will take time. "In the meantime, no other company will insure me because of this accident, and because I'm not a bad driver, I can't go into the New Jersey state-sponsored program."

Middleton's experience isn't rare. In fact, state departments of insurance across the country have expressed concern that nonrenewals have gone up as insurance companies tally their total losses and try to cut loose costly drivers.