What Is the Claims-Free Discount?

Last Updated on January 9, 2020

Auto insurance companies offer several different policy discounts to their customers. In fact, they offer so many discounts that it can be confusing for new customers to understand what they are or how to get them. One of the most common discounts you’ll encounter is the claims-free discount. Here’s what you need to know about the claims-free discount and how you can get it.

How Can I Qualify for the Claims-Free Discount?

claims-free discountInsurance companies give claims-free discounts to customers who have never made a claim on their car insurance policy. If you’ve never made a claim on your car insurance, be sure to ask about this discount when purchasing a new policy or renewing your old one. While this discount varies between insurance companies, it’s usually a significant one that’s worth asking about. Keep in mind that some insurance companies only offer this discount in certain states or to customers with certain other qualifying factors. You’ll usually need to have gone somewhere between three to seven years without making any claims in order to qualify for this discount.

Why Do Insurance Companies Offer This Discount?

When car insurance companies calculate premiums, they do so based off of the financial risk you present to them as a customer. The more likely you are to make a claim, the more likely the insurance company is to lose money paying it out. Therefore, insurance companies charge the highest premiums to the highest risk customers and reward low-risk customers with low premiums and discounts. If you haven’t made a claim in several years, that’s a good indication that you are a safe driver and are unlikely to make claims in the future. Insurance companies will offer you a claims-free discount as a reward. They want their most reliable drivers to continue to purchase insurance policies from them, and a significant discount is a great incentive.

How Much Will the Claims-Free Discount Save Me?

The amount of money you can save with the claims-free discount is going to vary between insurance companies. However, it’s typically somewhere between 10 and 30 percent. Some companies will start you at a smaller discount, like five percent, and then increase your discount for every year you go without making a claim. Even a 10 percent discount can really add up over time, so it pays to avoid making a car insurance claim.

How Do Claims-Free Discounts Work?

The definition of ‘claims-free’ varies between insurance companies – in many cases, it means you can’t have any claims history at all, but other companies are a little more lenient. In many cases, you can make a low-value comprehensive claim or an emergency road service claim without losing your claims-free discount. Some states even have laws protecting customers from losing their discounts over small claims like this. The most lenient companies will forgive any claim that isn’t an at-fault claim, so as long as you weren’t the one at fault in the accident, you can still maintain your discount. Alternatively, if your company is stringent, you may lose your discount as soon as you file a claim of any kind.

To qualify for these discounts, you’ll also usually need at least five years of clean car insurance history. If you’re getting a car insurance policy for the first time, you won’t qualify for the discount until you’ve built up your history. If there are multiple people on your car insurance policy, everyone will need to have gone five years without making a claim in order for the discount to apply. If you are on a plan with family members who have made claims, but you haven’t, you may be able to save money by switching to your own policy so you can get the discount.

How Can I Avoid Making Car Insurance Claims?

Of course, if you are in an accident that causes severe injury or damage, you’ll want to file a claim to avoid incurring substantial medical bills or car repair charges. However, there are some cases in which you may want to think twice before filing a claim. After an accident, you’ll want to check with an auto mechanic and get an estimate of the cost of repairs. If the damage wasn’t particularly costly, it might be better to just pay for the repairs yourself. Although the one-time repair cost may give you sticker shock, think about how much money you’ll save in the long run by maintaining your claims-free discount.

Of course, the best way to avoid claims is to drive as safely as possible. Always follow the rules of the road, and avoid driving when you’ve been drinking or taking medication that could alter your focus. You should also keep your car free of distractions – put your cell phone away when you’re driving, and make sure other paIt pays to take care when driving to maintain your discount.

If you think you may qualify for a claims-free discount and you aren’t receiving it, be sure to ask your insurance agent about your discount options. Typically, your insurance company will apply the discount automatically if you qualify for it. However, it’s worth checking just to make sure. If your insurance company doesn’t offer this discount and you have a clean driving history, it may be worth switching providers in order to save money. If you’ve made a claim in the past few years, don’t worry – if you maintain a claim-free record going forward, you’ll be able to regain your discount.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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