The calculation of the bonus-malus in insurance.?

The bonus-malus in car insurance: what is it?

The bonus-malus system in insurance is used to modulate the amount of your premium according to your behavior on the road. Also called reduction-increase coefficient (CRM), this device provides for the application:

a bonus, allowing you to reduce the amount of your reference insurance premium (1) , in the absence of a claim over a reference period (2) ;

a penalty, increasing the amount of your premium, if you have been involved in one or more responsible claims (2) .

For your insurance, the CRM is determined by period of 12 consecutive months, preceding by 2 months the annual expiry of the contract. Then, your annual CRM is multiplied with your reference bonus to determine the amount of your contribution for the coming year (2) .

How does the bonus-malus in car insurance work?

To understand how the bonus-malus in car insurance works , you must first know that your original coefficient, assigned when taking out a first contract, is 1. Thereafter, your CRM will evolve according to of your behavior.

In the absence of a claim: if your liability has not been incurred during the reference period of 12 months, you benefit from a reduction of 5% on your CRM, which amounts to multiplying it by 0.95. The new CRM is stopped at two decimal places and rounded down (2) .

In the event of a claim at fault: for each claim for which your liability is incurred, an increase of 25% applies to your CRM, which amounts to multiplying it by 1.25. Your coefficient can be revised upwards several times a year if you have several responsible accidents over the period (2) .

Good to know: if you have a vehicle for “Touring” or “All Travel” use, the reduction in CRM is 7% in the absence of a responsible claim (instead of 5%), while the increase is 20% per responsible claim (instead of 25%) (2) .

For the following years, the calculation of the bonus-malus is carried out in the same way. For each responsible claim, your CRM is multiplied by 1.25. On the other hand, in the absence of a claim over the reference period, your CRM is multiplied by 0.95. However, your reduction-addition coefficient cannot be less than 0.5, nor greater than 3.5 (1) .

Once your insurer has determined your CRM, it will multiply it by the amount of your reference premium in order to calculate the amount of your contribution for the coming year. Refer to the bonus-malus table below to better understand the application of the bonus or malus in insurance.

APPLICATION OF THE BONUS IN THE ABSENCE OF A RESPONSIBLE CLAIM

Bonuses

To understand the calculation of the bonus and penalty , let’s take the example of a motorist whose coefficient is 0.9 and whose amount of the reference premium is €1,500:

having had no at-fault claim during the reference year, his CRM goes to 0.85 (0.9 x 0.95) and his premium to €1,275 (€1,500 – 15%) for the year next ;

he then has an at-fault accident, his CRM increases to 1.06 (0.85 x 1.25);

in the same year, he again had an at-fault accident, increasing his CRM to 1.33 (1.06 x 1.25);

at the end of the year, his CRM is therefore 1.33, increasing his premium to €1,995 (1,500 + 33%).

Good to know: the bonus-malus system in insurance has two specificities:

if the responsibility for the accident is shared, the increase is only 12.5% ​​(instead of 25%), in particular if the loss involves a pedestrian or a cyclist;

if your CRM has been 0.5 for at least 3 years, no penalty will be applied during your first at-fault accident (2) .

Car and motorcycle bonus malus: what are the differences?

Is the bonus-malus system of a car and a motorcycle different ? As far as the calculation methods are concerned, the answer is no. Indeed, the bonus-malus for a motorcycle applies in the same way as for a car:

increase in CRM for each at-fault accident;

reduction of CRM by 5% in the absence of an at-fault accident over a reference period of 12 months.

However, you should know that the bonus-malus system may not apply to certain motorcycles. This is the case of two and three-wheelers, whose displacement is less than 125 cm3 (or power less than 11 kW). (1) . Thus, unless the contract provides for it, the bonus-malus on the insurance of a 50 cc scooter will not be applicable.

Good to know: you will not necessarily have the same CRM for your car and for your motorcycle, especially if you insured these vehicles on two different dates. Your insurer can then choose to use the best of the two. What if you insure a 3rd vehicle? In this case, if the other two (a car and a motorcycle, for example) have a bonus, the insurer will average the two to obtain the new bonus applicable to the complementary vehicle. On the other hand, if the two vehicles have a malus, the insurer will then apply neither bonus nor malus to it.

Who is concerned by the bonus-malus insurance?

The insurance bonus-malus applies to all land motor vehicles (car, motorcycle, utility vehicle, etc.), apart from exceptions that we will discuss later.