What is a no claims bonus in auto insurance?
If you are lucky as a driver not to have an accident or a claim, it seems natural to expect an auto insurance company to reward you for your excellent record. In the UK, drivers are rewarded with what is called a no claim premium. An auto insurance 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 there are more and more American auto insurance companies offering a similar discount, albeit under a different name, and affordable insurance with no no-claims bonus is still possible. . It can be financially beneficial to explore the auto insurance companies that reward drivers with a strong driving record the most. You may find that you can save more by switching to a different car insurance company.
How does a no-claim bonus work?
In the UK, the No Claim Bonus works through a tiered system. The longer a driver has driven without a claim, the higher the bonus amount. The result is a reduction in the amount a driver pays with their premiums. Since claims cost insurance companies time and money, a no-claims bonus is a way to reward drivers who have an intact record.
This exact bonus structure does not currently exist in the United States. However, drivers are offered other ways to save money to stay claim free. If you have a good driving record, it may be worthwhile to take the time to explore the safe and claims-free driving discounts offered by various carriers in your area. Most carriers offer a discount, program or bonus to drivers who fall under a Good Driver or Safe Driver designation.
Ways to save as a good driver
The average cost of auto insurance in the United States is $ 1,674 per year for a full coverage policy. However, lower premiums and discounts offered by insurance companies for good driving can result in serious savings for drivers, which can be similar to a no-claims bonus insurance plan.
- Clean driving: One of the factors used to determine how much you pay for auto insurance is your history and driving record.
- Without complaint: A driver without any complaints is probably considered less risky for the carrier, so the rates are lower.
- Benefit from discounts: Another factor influencing the amount you pay for auto insurance is the number of discounts applied to your policy. As a driver without any complaints, it is possible to benefit from more discounts from good drivers, in addition to lower rates. Plus, you can save even more by signing up for a telematics program with an operator, where your driving habits are monitored via an app or device, and then discounts are applied based on feedback.
A common discount offered by several carriers is a variant of a Good Driver discount. For example, Geico offers a good driver discount, which includes if a driver has not been in an accident for five years. If eligible, savings can be as much as 22%, with companies like Geico. Allstate offers savings if an insured 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 option of receiving $ 100 off a collision deductible for each year of accident-free driving, up to a maximum of $ 500 with some companies, which actually equates to a no-claim bonus. .
Frequently Asked Questions
Will I lose my good driver discounts if an accident is not my fault?
Yes, you will most likely lose a good driver’s discount if you have a claim on your driving record, even if the accident was not your fault. For this reason, you may see your premiums increase at renewal since you no longer have the discount applied. You are also likely to lose the Good Driver Discount if you receive other movement violations, such as a speeding ticket, reckless driving or impaired driving conviction, even if these events do not result. to an accident claim.
How do I know if I should file a complaint?
If you have minor damage to your vehicle, such as with a fender bender, you may not be sure if it is financially worth filing with your insurer. If another driver is involved, and especially if there are injuries, you will likely need to file a claim even if the damage appears minimal. If only your vehicle is involved, you must weigh the reimbursable repair costs against the increase in premiums (and the loss of a good driver’s discount) that you will face if you file the claim with your insurer. .
Is a no-claims bonus the same as an accident-free discount?
While 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 be eligible for No Claims Bonus Insurance if you have no claims on your driving record, including other types of movement violations. An accident-free surrender refers to a driver who has not been charged with any at-fault accident for a defined period of time.
Which carriers offer a discount or a good driver bonus?
The claim free bonus is mainly used in the UK, but there are a large number of carriers offering good discounts for drivers to stay accident or claim free. In addition to Geico and Allstate, most other national and regional carriers offer either good discounts for drivers or discounts for driving without an accident or safely using telematics. For example, State Farm offers a good driver discount if you haven’t had a claim and had no at-fault accident for at least three years.
Which carrier has the cheapest rates for good drivers?
If you want to find the cheapest fares to be a good driver, one of the most effective methods is to do a comparison store with multiple carriers. Make sure that each quote uses the same coverage options and other criteria so that you are really comparing the exact same policies. Once you have multiple quotes, it will be easier for you to identify which carrier has the cheapest fares and highest discounts to be a good driver.