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What Is a No Claims Bonus?

In the United States, your car insurance company calculates your monthly premiums based on a number of factors, including your claims history and your driving record. Maintaining a clean and safe history is key to cutting down the cost of your car insurance. If you’ve maintained an accident-free driving record and want to cash in on incentives from your insurance company, look into your no claims bonus options.

No Claims Bonuses Explained

Every year that you continue to drive under your car insurance without filing a claim, your insurance company takes notice. As a result, they apply a no claims bonus or discount on your monthly or annual premium. The longer you continue to drive without filing a claim, the higher your bonus could be. The amount of your no claims bonus will vary depending on your insurance company.

How Can You Build Your No Claims Bonus?

For each year you do not make a claim, your insurance company will grant you another no claims bonus for an additional year. However, most insurance companies only use a maximum of five years when they decide to give you a discount. Different insurers have different policies for this program.

• Allstate offers a Safe Driving Bonus program that pays out each six-month policy period that you do not have an accident.

• GEICO gives its customers an average of 26% average annual savings through its Five-Year Accident-Free Good Driver program.

• Nationwide offers a 10% discount for five years of accident-free driving.

• Under Esurance, you can receive a Claim-Free discount if you have a claims-free record for five years and do not have a DUI conviction.

What Happens If You Get Into an Accident?

If you have to make a claim on your insurance policy, do not let the risk of losing your no claims bonus deter you. After an accident, you should receive the compensation you need to help recover from your injuries and property damage. In addition, you will not lose the entirety of your no claims bonus after you get into an accident in certain situations.

If you make a claim with your insurance company and your company pays you for your damages, they will usually reduce your no claims bonus by two years. However, different insurance companies have different policies for these incidents. Check with your provider to see what their policies are.

• If you were at-fault for the accident, you may lose some of your no claims bonus, depending on your insurance policy. You may lose the entirety of your bonus under some policies.

• If you were not at-fault for the accident, you may not lose your no claims bonus. Your insurance company could reclaim the payout from the at-fault driver’s insurance company and you may not see any losses.

• If you cannot determine who is at-fault for an accident, your insurance company and the other driver’s insurance company could split the cost of the claims. You may see a change in your no claims bonus. Some policies may apply this rule to cases of car theft and weather damage.

• If you pay for a policy with a reduced no claims bonus after an accident and your insurance company discovers later that you were not at-fault for the accident, the insurance company could reinstate your no claims bonus. In addition, they may provide you a refund for your extra payments.

What Happens If I Do Not Receive a No Claims Bonus I Deserve?

You can contact your insurance provider to give you the details of your no claims bonus if they do not already provide you with one on your renewal or cancellation notice. If your insurance company offers a no claims bonus and does not honor its commitment, or tries to reduce your bonus unfairly, you may be able to hold them liable. An Arizona insurance bad faith attorney can help answer questions about no claims bonus distributions.