What is a no claims bonus in car insurance?
If you are fortunate enough as a driver to avoid accidents and claims, it seems natural to expect a car insurance company to reward you for your good driving record. Drivers in the United Kingdom are rewarded with something known as a no claims bonus. In the case of car insurance, a no-claims bonus is simply a reduction in the cost of your premiums if you have not filed a claim.
The good news for American drivers is that more American car insurance companies, albeit under a different name, are offering a similar discount, and affordable insurance without a no-claims bonus is still available. It may be financially advantageous to investigate which auto insurance companies most favor drivers with a clean driving record. You may discover that switching car insurance companies allows you to save more money.
How does a no claims bonus work?
The no-claims bonus operates on a tiered system in the United Kingdom. The longer a driver has driven without making a claim, the larger the bonus. As a result, the amount a driver pays in premiums is reduced. Because claims cost insurance companies time and money, a no-claims bonus is one way to reward drivers with a clean driving record.
This specific bonus structure does not currently exist in the United States. Drivers, on the other hand, are offered alternative ways to save in order to remain claim-free. If you have a spotless driving record, it may be worthwhile to investigate the safe driving or claims-free discounts offered by various carriers in your area. Most carriers provide a discount, program, or bonus to drivers who are classified as good or safe drivers.
Ways to save as a good driver
A full coverage policy in the United States costs an average of $1,674 per year. Lower premiums and discounts offered by insurance carriers for good driving, on the other hand, can result in significant savings for drivers, similar to a no-claims bonus insurance plan.
- Clean driving: One of the factors used to determine how much you pay for car insurance is your driving history and record.
- Claims-free: A driver with no claims is likely to be viewed as less risky by the carrier, and thus the rates are lower.
- Leverage discounts: The number of discounts applied to your policy is another factor that influences the amount you pay for car insurance. As a no-claims driver, you may be eligible for a greater number of good driver discounts, in addition to lower rates. Furthermore, you may be able to save even more money by enrolling in a telematics program with a carrier, in which your driving habits are monitored via an app or device and then discounts are applied based on the feedback.
A variation of a Good Driver discount is a common discount offered by multiple carriers. Geico, for example, provides a good driver discount if a driver has been accident-free for five years. If you are eligible, you could save up to 22% with companies like Geico. If a policyholder enrolls in Allstate's Safe Driving Bonus program, they will receive a bonus check for every six months they remain accident-free. Drivers may also be eligible for $100 off a collision deductible for each year of accident-free driving, up to a maximum of $500 with some companies, which is essentially the same as a no-claims bonus.
Frequently asked questions
Will I lose my good driver discounts if an accident isn’t my fault?
Yes, even if the accident was not your fault, you will most likely lose your good driver discount if you have a claim on your driving record. As a result, your premiums may increase at renewal because the discount is no longer applied. If you receive other moving violations, such as a speeding ticket, a reckless driving conviction, or driving under the influence, you are likely to lose the good driver discount, even if these events do not result in an accident claim.
How do I know if I should file a claim?
If you have minor damage to your vehicle, such as a fender bender, you may be unsure whether it is financially worthwhile to file a claim with your insurance company. If another driver is involved, especially if there are injuries, you will almost certainly need to file a claim, even if the damage appears minor. If it's just your car, you should weigh the out-of-pocket repair costs against the increase in premiums (and loss of a good driver discount) you'll face if you file a claim with your insurance company.
Is a no claims bonus the same as an accident-free discount?
Although the two concepts are similar (rewarding drivers for not having any claims on their driving record), there is a subtle difference between the two. No-claim bonus insurance is only available if you have no claims on your driving record, including other types of moving violations. A driver who has not been charged with any at-fault accidents for a specified period of time is eligible for an accident-free discount.
Which carriers offer a good driver discount or bonus?
The no-claims bonus is most commonly used in the United Kingdom, but there are many carriers that offer good driver discounts for remaining accident-free or claims-free. In addition to Geico and Allstate, most other national and regional carriers use telematics to offer good driver discounts, accident-free or safe driving discounts. State Farm, for example, provides a good driver discount if you have been claims-free and have had no at-fault accidents for at least three years.
Which carrier has the cheapest rates for good drivers?
If you want to find the best rates for being a good driver, one of the most effective methods is to shop around with different carriers. Make certain that each quote includes the same coverage options and other criteria so that you are comparing the same exact policies. Once you have received multiple quotes, you will be able to more easily determine which carrier offers the lowest rates and the greatest discounts for being a good driver.