What is a no claims bonus in car insurance?

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If you are fortunate enough as a driver to remain accident- and claims-free, then it seems natural to expect a car insurance company to reward you for your excellent record. In the UK, drivers are rewarded with something called a no claims bonus. A no-claims bonus in car insurance is simply a reduction in the cost of your premiums if you have not filed a claim.

The good news for U.S. drivers is there are more American car insurance companies offering a similar discount, albeit under a different name, and affordable insurance without a no-claims bonus is still possible to find. It may be financially beneficial to explore which auto insurance carriers reward drivers with a solid driving record the most. You may find you can save more by switching car insurance companies.

How does a no claims bonus work?

In the UK, the no-claims bonus works via a tiered system. The longer a driver has driven claims-free, the higher the amount of a bonus. The result is a reduction in the amount a driver pays with their premiums. Since claims cost the insurance carriers time and money, a no claims bonus is one way to reward drivers who have an intact record.

This exact bonus structure does not currently exist in the U.S. However, drivers are offered other ways to save for remaining claims-free. If you have a clean driving record, it may be worth your time to explore the safe driving or claims-free discounts available with various carriers in your area. Most carriers offer a discount, program or bonus for drivers who fall under a good or safe driver designation.

Ways to save as a good driver

The average cost of car insurance in the U.S. is $1,674 per year for a full coverage policy. However, lower premiums and discounts offered by insurance carriers for good driving can result in serious savings for drivers, which may be similar to a no-claims bonus insurance plan.

  • Clean driving: Your driving history and record is one of the factors used to determine how much you pay for car insurance.
  • Claims-free: A driver without any claims is likely considered less risky to the carrier, therefore the rates are lower.
  • Leverage discounts: Another factor influencing the amount you pay for car insurance is the number of discounts applied to your policy. As a driver without any claims, it’s possible to qualify for a greater number of good driver discounts, in addition to lower rates. Plus you may save even more by enrolling in a telematics program with a carrier, where your driving habits are monitored via an app or device and then discounts are applied based on the feedback.

A common discount offered by multiple carriers is some variation of a Good Driver discount. For example, Geico offers a good driver discount, which includes if a driver has been accident-free for five years. If eligible, the savings may be up to 22%, with companies like Geico. Allstate offers savings if a policyholder is enrolled in the Safe Driving Bonus program and for every six months they remain accident-free they earn a bonus check. Drivers may also have the opportunity to receive $100 off a collision deductible for each year of accident-free driving, up to a maximum of $500 with some companies, which is effectively the same thing as a no-claims bonus.

Frequently asked questions

Will I lose my good driver discounts if an accident isn’t my fault?

Yes, you will most likely lose a good driver discount if you have a claim on your driving record — even if the accident is not your fault. Because of this, you might see your premiums increase at renewal since you no longer have the discount applied. It is also likely you will lose the good driver discount if you receive other moving violations, such as a speeding ticket, a reckless driving conviction or driving under the influence, 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 with a fender bender, you may be unsure if it is worth it financially to file it with your insurance carrier. If another driver is involved, and especially if there are injuries, then you will likely need to file a claim even if the damage seems small. If it’s only your vehicle involved then you need to weigh the out-of-pocket repair costs versus the increase in premiums (and losing a good driver discount) you will face if you file the claim with your insurance carrier.

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 slight difference between the two. You would only qualify for no-claim bonus insurance if you have zero claims on your driving record, including other types of moving violations. An accident-free discount refers to a driver who has not been charged with any at-fault accidents for a defined period of time.

Which carriers offer a good driver discount or bonus?

The no-claims bonus is used primarily in the UK, but there are a large number of carriers offering good driver discounts for remaining accident-free or claims-free. In addition to Geico and Allstate, most other national and regional carriers offer either good driver discounts, accident-free or safe driving discounts by using telematics. For example, State Farm offers a good driver discount if you are claims-free and have no at-fault accidents for at least three years.

Which carrier has the cheapest rates for good drivers?

If you are interested in finding the cheapest rates for being a good driver, one of the most effective methods is to conduct a comparison shop with multiple carriers. Make sure each quote uses the same coverage options and other criteria so you are truly comparing the same exact policies. Once you have multiple quotes you will be able to more easily identify which carrier offers the least expensive rates and highest discounts for being a good driver.

Written by
Sara Coleman
Insurance Contributor
Sara Coleman has three years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, Reviews.com, Coverage.com and numerous other personal finance sites. She writes about insurance products such as auto, homeowners, renters and disability.
Edited by
Insurance Editor