How to calculate your bonus-penalty coefficient? Impact on auto insurance
The bonus-malus coefficient is a system of increasing and reducing the amount of the auto insurance premium. It was imposed on all insurers in 1976 in an attempt to encourage motorists to drive more safely. This system is based on the evaluation of driver behavior. If the latter has not caused an accident in a year, he benefits from a reduction in his insurance premium. On the contrary, the more accidents he causes, the more he will suffer a penalty and therefore an increase in the cost of his insurance. If this is clear in principle, how is the bonus-penalty coefficient calculated?
How does the bonus / penalty work?
How to calculate the coefficient
How the bonus-malus system works
The bonus-penalty coefficient which is taken into account in the context of auto insurance is calculated by the insurer based on the behavior of a driver over a year. More precisely on the history of the last 12 months, shifted by two months compared to the anniversary date of the contract (if the anniversary date of the contract is December 31, 2016, the period taken into consideration will be November 1, 2015 as of October 31, 2016). The value of this coefficient varies between 0.50 and 3.50. When you take out an auto insurance contract, your starting coefficient is 1. This means that you will have to pay once the initial insurance premium (reference premium), or 100% of the latter.
This coefficient can decrease or increase depending on the behavior of the motorist at the wheel:
It is reduced by 5% in the event of good driving (0 responsible accidents) over a year: the coefficient for the previous year is then multiplied by 0.95. For use of the “Tours or All trips” vehicle, the reduction is 7%;
On the contrary, it is increased by 25% for each responsible accident: the coefficient for the previous year is then multiplied by 1.25. If you are found to be partially responsible for the accident, the increase will be 12.5%.
Calculation of the bonus-malus for your car insurance in practice
To shed some light on the previous remarks, here are some practical examples:
If your coefficient for the previous year is equal to 1 and if you have not caused any responsible accident during the following year, your new coefficient will be equal to 1 x 0.95. In this case, if your previous premium was 200 euros, the following year you will have to pay 200 x 0.95, or 190 euros (a decrease of 5%).
If your coefficient for the previous year is 1.20 and you caused a at-fault accident during the year, your new coefficient will be 1.20 x 1.25, which is 1.50. If your premium for the previous year was 200 euros, the new one will be: 200 x 1.50 = 300 euros.
If an insured person does not cause any loss for 13 years, he may reach a bonus equal to 0.50, the lowest possible coefficient. This amounts to paying half the amount of the referral premium. Apart from that, whatever the value of a penalty coefficient, it will return to 1 after 2 years without causing a responsible accident. Finally, it should be remembered that neither the change of insurer nor the purchase of a vehicle erases the bonus-malus.
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