Careful drivers expect recognition. A no-claim bonus is a premium discount given to policyholders who have not made a claim during a specified prior period. It is most common in motor insurance and sometimes appears in other personal lines.

Bonus scales typically increase with consecutive claim-free years up to a maximum discount. A single claim may reduce the bonus by one or more steps or eliminate it entirely, depending on the insurer’s rules. Some policies offer protection that preserves the bonus after one claim for an extra premium.

The bonus incentivizes loss prevention and discourages small claims. It can also create disputes when policyholders believe a claim should not affect their discount. Clear policy language and annual statements of bonus entitlement help manage expectations at renewal.

• Premium discount for claim-free experience
• Common in auto insurance
• Builds with consecutive claim-free years
• May be protected by optional covers