When purchasing insurance, it is an automatic assumption that if you ever need to make a claim that it is the natural course of action. Submitting a claim to an insurance company can be successful or unsuccessful dependent on the terms and conditions imposed by the insurer when you took out your insurance policy. You also need to consider the effect of submitting a successful claim!

Insurance companies operate on claims margins (the difference between the premiums generated and the amount paid out to settle claims). In order to maintain its margin, an insurer may raise premiums if policy holders make too many claims or too many of the wrong sort of claims. It is therefore always advisable to think twice before submitting a claim to your insurance company. Insurance is really there to cover the big disasters that could financially cripple you and not the small mishaps that leave you slightly out of pocket.

For example, if you accidentally reverse into some else's car or drive off the road in to a tree, should you claim on your insurance? Obviously this depends on the extent of the damage, the cost to repair it and the policy excess. It may be cheaper to pay to have your car and the other driver's car fixed rather than involving the insurer. This will ensure your claims record remains and the level of excess you pay remains the same.

Building up your 'no claims' bonus entitles you to a reduction in your premium each year (up to a limited number of years which varies depending on the insurer). If you make a claim you will lose your 'no claims' bonus and you can expect your premium to rise by as much as 50%.

It is possible to protect your 'no claims' bonus by paying a higher premium. This will enable you to make a claim without losing your 'no claims' bonus or face a higher premium. Most car insurance companies offer this to drivers who have a careful driving record and four or more claim free years.

The definition of 'protected no claims' will vary from insurer to insurer so it is important to check what each insurer's terms and conditions are. Even if you have 'protected no claims' there is no guarantee that you premiums will not rise following an accident.

Unlike car insurance, home insurers do not offer no claims discounts. Home insurers feel it would be unfair to punish policy holders since the majority of home insurance claims are as a result of incidents that are out of the control of the home owner such as fire, storm, flooding and burglary.

However, if you have a house insurance policy you should still think twice before claiming for minor damages such as a broken window. Home insurance still operates on similar principles to car insurance, the more claims you make the higher your new premium will be. It is worth remembering that a standard house insurance policy will allow you to specify a number of individual items which may be of higher value than most of your possessions. However, in the event of a claim your total house insurance premium will rise. For higher value items such as a computer or your jewellery it is possible to take out a specific insurance policy. In the event of a claim, your new premium will only reflect the value of the individual item rather than the entire value of all your possessions.