The bonus-malus system is a clause included in the insurance code. It applies to land vehicle insurance contracts. The choice of application depends on the insurer in question. The calculation procedures are also set out in the Insurance Code.
The importance of calculating the bonus-malus
The bonus-malus is a system considered to be a key element of car insurance. It is also called the Reduction-Major Coefficient or CRM. This is a coefficient to be applied to the basis of an insurance rate over a specified period. The existence of this system reflects the history of the insured as a driver. The challenge is to be able to increase your bonus after a year without claims. A penalty will be imposed on you if you do not. It is a weighting method whose objective is to assess risks. Motor insurance determines a regulatory system for calculating the bonus-malus. It must be noted that it is applicable in car, motorcycle and ecological insurance. It is then possible for insurers to choose the system to be applied themselves.
What you need to know about calculating bonus-malus bonuses
The purpose of the bonus-malus is to reward all benevolent drivers by granting a reduction in the annual car insurance premium. In the event of an actual loss, the premium will increase. There are situations that do not trigger malus. Indeed, theft, fire, and broken glass are not the subject of a malus. The bonus-malus law provides for the existence of a ceiling. A maximum bonus corresponds to a coefficient of 0.50 while a maximum penalty equals 3.5. It is even possible for you to make the malus disappear by doing 2 successive years without accident. Your first insurance gives you a coefficient equal to 1, which means that there are no bonuses or penalties.
Principle of calculation of the bonus-malus
The principle is to consider a claim-free year as a 5% reduction in the coefficient. To obtain a new coefficient, simply multiply last year’s coefficient by 0.95. In the event of an accident involving the insured, there will be a 25% increase in the coefficient. A new coefficient is obtained by multiplying the previous one by 1.25. No increase will be deducted following a first accident if you have a 50% bonus over a period of at least 3 years. To obtain a reduced reference contribution, you only need to benefit from bonuses.