6 things to know before you file a claim

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 -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 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 nonrenewal.

2. Ask about penalties before you have to file a claim.

3. One minor probably won't cause your policy to be dropped.

4. If you're at fault, prepare for a rate increase.

5. A minor could be a major problem.

6. Know your next step if your policy is not renewed.