Particularly common in the field of auto insurance, the concept of bonus and malus also applies to home insurance and can have a significant financial impact on the premium amount. But how is it calculated? What elements are imposed by law? And what types of risks or claims impact the bonus or malus? Let’s take a look at what you need to know about the bonus-malus system.
Bonus-malus: What is it?
More commonly referred to as bonus-malus, the reduction and increase system allows policyholders who do not cost their insurer anything to benefit from a reduced premium the following year, while penalizing those who frequently file claims.
- The insurance bonus refers to the privileges granted to the policyholder as a reward for behavior that helped prevent accidents. In practice, it is granted according to a progressive scale that considers either the total absence of claims or the non-liability of the policyholder (as in the case of accidental glass breakage or a parking accident where the responsible party could not be identified), or measures taken to reduce risk (such as installing an alarm in your home). It is particularly valued in the context of auto insurance as it allows the most cautious drivers to slowly but surely reduce the amount of their annual premium.
- Conversely, the malus is the daunting mechanism that allows insurers to collaborate to identify and penalize customers whose behavior frequently puts them at fault or whose property presents recognized and significant risks, such as areas prone to flooding or wildfires.
How are your auto insurance bonus and malus calculated?
The calculation of the bonus or malus on your auto insurance premium follows a scale imposed by law: the well-known reduction-increase coefficient (CRM). Set at 1 in the first year, it is subject to a reduction of -5% for each so-called bonus year, and a much higher coefficient of +25% in the event of circumstances or behavior likely to cost the insurer more—the malus.
Thus, an annual auto insurance premium set at €1,000 can be reduced by 5% if you are not responsible for any accidents (resulting in €950). Conversely, if you have caused an accident, it may be subject to a 25% increase (€1,250).
Note that the premium amount itself remains set by the insurance company. Indeed, it can vary from year to year and according to other factors, such as additional coverage, the number of residents or drivers, or inflation. Some insurers also offer to protect the bonus. This option is generally limited to the first accident and is only offered to policyholders who renew their contract for a minimum period of 3 or 5 years.
