What Is a No-Claims Bonus, and How Does It Affect My Premium?

What Is a No-Claims Bonus?

A no-claims bonus is a discount provided by auto insurance companies to policyholders who go one or more years without making a claim on their insurance.

In countries like the U.K., providers offer a discount for each consecutive year a policyholder remains claim-free. In the U.S., companies offer this in the form of good driver discounts and rewards programs. If you get a no-claims bonus, you can enjoy savings when renewing or shopping for coverage.

Typical No-Claims Bonus Discounts

While these car insurance discounts aren’t always advertised as no-claims bonuses, most car insurance companies offer them. Here are some of the no-claims bonuses you can earn:

• Accident-Free: Drivers get a reward for going a set number of years — usually three to five, but sometimes as low as one — without an at-fault accident or claim. This discount averages between 10 to 30 percent.
• Good Driver Discounts: Get a discount for having a clean record (no tickets, DUIs, or claims). This often overlaps with accident-free discounts, but sometimes applies separately.
• Claim-Free Renewal: Some car insurance companies provide cashback or credit for renewing a policy claim-free. For example, Allstate’s Safe Driving Bonus rewards you with a bonus for every six months you drive without an accident.¹
• Claim-Free Bonus: Rewards customers with five percent cashback at each renewal if they haven’t made any claims.
• Deductible Rewards/Vanishing Deductible: For every claim-free year, your deductible decreases.
• Telematics Safe-Driving Discounts: Track driving habits with an app or device to get a discount at each renewal period.
• Loyalty-Based Claim-Free Discounts: Long-time customers with a clean record earn extra savings.
• Multi-Vehicle and Household Discounts: If all vehicles or drivers on the policy remain claim-free, they receive an extra discount.

Typically, claims for cracked windshields or not-at-fault accidents (where insurers recover costs from another party) do not affect your discount. However, if the fault is unclear or recovery is unsuccessful, you may lose your discount.

Tips for Keeping and Growing Your NCB

• Drive safely: Avoid risky behaviors, follow traffic laws, and practice defensive driving.
• Consider accident forgiveness: Some insurers offer accident forgiveness, which keeps an at-fault accident from increasing your premium.
• Telematics: Sign up for usage-based programs to get an extra discount based on your driving habits and mileage.
• Shop different providers: You may get a better rate from other providers if you have a clean record, so compare quotes from potential insurers every few years.

No-claims bonuses reward drivers with discounts for not filing claims. There are multiple types of bonuses, like claims-free discounts, good driver discounts, and vanishing deductibles.