What happens to your no-claims bonus after an accident?
"No-claim" means "no insurance claim." Insurance companies use a reward system to incentivize accident-free driving. The more accident-free years you accumulate, the greater your no-claim discount. If you file a claim with your auto insurance company, you lose your accident-free years and forfeit a portion of your no-claim discount.
No-Claim Bonus Increases After a Claim
If you’re involved in an accident, it can sometimes affect your claim-free years and, consequently, your no-claim discount. If you’re liable for damage to another party, the insurer will be billed for it. We call this “at-fault damage.” As a result, you’ll lose claim-free years and receive a lower no-claim discount. This means you’ll end up paying more for your auto insurance.
Claims you file under your limited comprehensive auto insurance policy do not affect your no-claims discount. These include, for example, damage to your car caused by hail, fire, or a storm; broken windows; theft of the car; or a collision with stray animals. Was the damage caused by someone else? If so, you can file a claim with the other party’s auto insurer. In that case as well, this will not affect your claim-free years or your no-claims discount.
How much of my no-claims discount will I lose after a claim?
You lose your no-claims years and no-claims bonus by filing a claim with your insurer. A single claim costs you five no-claims years. If you have more than 15 no-claims years, filing a claim will always set you back to 10 no-claims years. There are also certain types of damage where you won’t lose your no-claims discount if you file a claim. These are damages covered by the limited comprehensive coverage portion of your auto insurance. Examples include windshield damage, storm and hail damage, and theft of the vehicle. However, if the damage is caused by a collision or vandalism, filing an insurance claim will result in the loss of your no-claims years.
No-Claims Table
A no-claims table is also known as a bonus-malus ladder. Insurers use this table to determine the amount of the no-claims discount. The table, or ladder, consists of several steps. The higher you are on the bonus-malus ladder, the greater your no-claims discount. Every year that you don’t file a claim with your insurer, you move up one step on the ladder. As a result, the no-claim discount can reach up to 80% of the base premium. However, if you file a claim, you lose your no-claim discount and therefore pay a higher insurance premium. If you file a claim, you always drop back five claim-free years on the bonus-malus ladder.
Every insurer has its own no-claims discount program. As a result, there may be differences in discounts among the various insurers. You can find your insurer’s no-claims discount program in the policy terms and conditions.
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