What Is a No-Claims Bonus?

A no-claims bonus is a pricing concept used in some insurance markets to reflect a claim-free history. In simple terms, it refers to a discount or favorable pricing treatment that may build over time when no claims are made.

The term is most commonly used in personal lines insurance, especially auto insurance, where claims history is a visible factor in pricing.

How It Works in Practice

In many markets, a no-claims bonus builds gradually over time. Each claim-free period may increase the discount applied to a policy.

• Year 1 without claims → small discount
• Several years → larger discount
• Long history → capped or maximum level

What Happens After a Claim

A claim may reduce or remove the bonus. Depending on the insurer:

• It may step back rather than reset completely
• Some claim types may not affect it
• Rules vary significantly by market

How It Relates to Other Terms

• Insurance premium
• Insurance claim
• Deductible