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Car insurance no-claims discount
A no-claims bonus discounts your premium, but should you go out of your way for it?
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The longer you go without filing a claim, the more likely you’re eligible for savings because of your low accident risk. But finding an insurance company with a no-claims bonus doesn’t always mean you’re getting the best value on coverage.
What is a no-claims bonus?
A no-claims bonus is a discount on your car insurance because you haven’t filed any recent accident claims. Not filing claims suggests to your insurance company that you’re a safe driver. Many insurance companies reward safe driving with steep savings. However, you typically must go without a claim for three to five years first.
How does it work?
No-claims discounts work like this:
- Each year you hold car insurance and don’t make a claim, you might become eligible for a discount. For example, the no-claims discount for Esurance kicks in after 3 years of good driving.
- Also known as the ‘Good Driver’ discount, depending on your provider.
Generally, your discount won’t be reduced for claims where you were not at fault. This means you can still make weather-related claims or accident claims where the other driver was clearly at fault without losing your no-claims discount. However, the exact types of claims you can make without losing your discount will be different depending on the insurer.
When you switch car insurance, it’s also worth looking at whether your new insurer will recognize your no-claims discount and clean driving record. It still may be worth it to switch for significant savings even if the timer for your no-claim discount will restart at a new company.
Which companies offer no-claims discounts?
Most companies give discounts to their customer based on how long they go without making a claim., though some take upwards of five years to begin saving you money.
- Allstate. Safe driver discounts could save you up to $200 or 15% each year, and accident forgiveness prevents rates from going up even after an insured driver is found at fault for an accident. How many accidents are forgiven depends on your level of coverage.
- Esurance. Start saving up to 20% on your premiums when you maintain claim-free coverage for five years or more — available in 10 states, most recently including Pennsylvania. Since Esurance’s merger with Allstate Insurance in 2011, the brand’s offerings are expanding; check with an agent or a provider representative to learn more.
- Progressive. This provider has a loyalty rewards program that helps customers keep their rates down when claims are resolved quickly and at low cost; you could see a 10-15% reduction in your premiums by staying claim-free for more than 5 years.
- USAA. USAA offers accident forgiveness on policies for as little as $1 extra per month that’s available in most US states.
- Nationwide. Accident forgiveness only applies to one accident per policy, but it can include other drivers on the policy rather than just the policyholder. This provider also offers disappearing deductible discounts for safe drivers, with a reduction limit of $500.
- Liberty Mutual. While Liberty Mutual only covers the first accident on a policy, it does comes standard on all policies except in North Carolina and California.
- Geico. Geico awards certain longtime customers with accident forgiveness upon reaching milestone coverage anniversaries. For more information on this, contact an agent or representative about the options in your area. Qualified customers can also purchase accident forgiveness as an add-on to their policy.
- The Hartford. Qualified customers with the Advantage Plus policy package will be eligible for accident forgiveness. Policyholders can also get a $50 reduction in their deductible for every year they go accident-free.
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The problem with a no-claims discount
The key to cheap car insurance is to shop around every year, and take your business elsewhere if you find a better deal. A no-claims discount can get in the way of this. If you’ve worked hard to build your discount, you might be less inclined to switch to an insurer that will recognize your discount the same way. This means your insurance options are a lot more limited, and you’ll likely pay more in the long run.
If you can find better value elsewhere, don’t let a no-claims discount hold you back. It pays to know what your options are and what other deals are out there.
Pros and cons of no-claims discounts
- Can get you a significant discount
- Can be protected with various coverage options
- Will not necessarily be lost if you have to make a no-fault claim
- Might deincentivize you from shopping around and saving
- Policies with a no-claims discount aren’t necessarily the best
- Even with a no-claims discount, your premiums could still increase after an accident
What kinds of no-claims discounts can I get?
Because discount types and terms vary between providers, we’ve outlined a few different ways you can get a discount for keeping your claims to a minimum. Not all kinds of discounts are available everywhere in the US. To find out if one of these discounts is available where you live, contact your provider, or include these discounts in your must-have list when you’re shopping for a new policy.
Safe driver discount or disappearing deductible
With this kind of discount, you’ll get a rate break or deductible reduction as long as you’re not involved in any accidents. For some insurance providers, like Allstate, you can take $100 off your deductible and even get a cash discount for each year you’re accident-free.
This kind of discount also allows for claims not related to safe driving, such as theft, vandalism or inclement weather damage like hail and lightning, without affecting your eligibility for a safe driver discount.
No claim or claim-free bonus
Some companies, like Esurance, will give you a discount of up to 20% off your premiums if you maintain your policy with no accidents or claims for five years. This is the most direct kind of claim-free discount, but it also takes multiple years of safe driving and consistent coverage to qualify.
While it might not technically be a discount, this policy feature is a reward for maintaining your coverage and being claim-free, often for two or three years. When you’re in an accident, especially one that requires you to file an insurance claim, you often see your rates increase to cover the slight jump in risk to the provider; this discount protects the driver from any increase in cost because of the track record for safe, claim-free driving.
If you’re a safe driver who’s had no claims or accidents in years, you deserve to save money on your premiums.
But when it comes to discounts for staying claim-free, not all providers are created equal — and by comparing the discounts of several insurance companies, you could find a truly great value on your coverage.
Visit our comprehensive guide to car insurance to learn more about car insurance, including policy terms, coverage options, rates and discounts.
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