How Car Insurance Is Priced: Bonus-Malus and 12 Ways to Pay Less
Car insurance is priced on risk: the insurer estimates how likely you are to claim and how much a claim would cost, then adds its costs. The main inputs are the driver (age, experience and claims history) and the car (its model's claims record, value and power). Where it is kept, how it is used and the cover and excess you choose complete the picture. Across Europe, your claims history is usually built into the price through a bonus-malus or no-claims system, which rewards each claim-free year and penalises at-fault claims. In France, for example, a careful driver can halve the base premium after 13 claim-free years.
Key takeaways
- Your claims record is the factor you control most. In France the bonus-malus coefficient falls 5% for each claim-free year, to a minimum of 0.50, and rises 25% for each at-fault claim.
- The car matters as much as the driver. In Germany, the insurers' association GDV puts every model into a type class each year based on its claims record; for 2026 more than 10 million owners got a new class.
- Insurers in the EU may not charge men and women differently: the European Court of Justice ruled against gender-based pricing on 1 March 2011.
- Since the 2021 update of the EU Motor Insurance Directive, an insurer must treat a claims history statement from another EU country as equal to a domestic one.
The factors that set your premium
| Factor | What the insurer looks at | Why it matters |
|---|---|---|
| Claims history | Years without at-fault claims; recent claims | The strongest predictor of future claims |
| Driver | Age, years since passing the test, sometimes occupation | Young and inexperienced drivers claim more often |
| The car's model | Claims statistics of that model, repair costs, theft risk | Some models are cheaper to repair and stolen less |
| Value and power | Price, engine output, performance | Expensive cars cost more to replace; powerful cars carry more risk |
| Where you live | Regional claims statistics | Areas with more crime usually cost more |
| Use | Annual mileage, garage or street parking, other drivers | More kilometres and more drivers mean more exposure |
| Cover and excess | Liability only, partial or full cover; size of excess | More cover costs more; a higher excess lowers the premium |
Not every country uses every factor, and each insurer weights them differently. The German motoring club ADAC lists the factors German insurers apply on top of the model and regional classes. They are annual mileage, the deductible, the car's age when you bought it and whether it has a garage, plus the years without claims, who uses the car and the driver's age.
The car: type classes and why models differ
Germany shows most clearly how much the model matters. Every year the insurers' association GDV analyses the claims records of all registered car models and assigns each one a type class (Typklasse). According to ADAC, the 2026 statistics cover about 33,000 models and claims from 2022 to 2024. A lower class means a cheaper premium.
| Type of cover (Germany, 2026) | Range of type classes |
|---|---|
| Liability (Haftpflicht) | 10 to 25 |
| Partial cover (Teilkasko) | 10 to 33 |
| Full cover (Vollkasko) | 10 to 34 |
For liability, what counts is how much the model's drivers cost injured third parties. This is why many powerful luxury models and SUVs sit in high classes, while older models and small cars tend to be in low ones. If a low premium matters, start with our list of the best small city cars. For 2026, more than 10 million German car owners got a new classification. About 5.9 million moved to a higher liability class and about 4.5 million to a lower one, while about 75% kept their class.
The practical lesson works anywhere in Europe: get insurance quotes for the exact model and engine before you buy. Two similar cars can sit several classes apart. Our car comparison helps you set a shortlist side by side, and the cost of ownership calculator shows how a higher premium changes the yearly cost.
Bonus-malus and no-claims discounts explained
A bonus-malus system moves you up or down a scale at each renewal. A claim-free year gives a bonus (a lower premium); an at-fault claim gives a malus (a higher one). In the UK and Ireland the same idea is called a no-claims discount or bonus. Wikipedia notes that, in general, one step on the scale is worth about 5%, and that each country's rules set the maximum bonus and malus.
France has one of the clearest systems, the coefficient de réduction-majoration:
| French bonus-malus rule | Value |
|---|---|
| Starting coefficient for a new driver | 1.00 |
| Each year without an at-fault claim | −5% |
| Minimum coefficient (maximum bonus) | 0.50, reached after about 13 claim-free years |
| Each at-fault claim | +25% |
| Claim with shared responsibility | +12.5% |
| Maximum coefficient | 3.50 |
| After two consecutive claim-free years | coefficient no higher than 1.00 |
| Not counted | Theft, broken glass, fire, natural disasters |
The coefficient multiplies the insurer's base premium. It belongs to the driver rather than the car, and it can be taken to another insurer. The relevé d'information, a statement of your record, can be requested from your insurer at any time.
Worked example: what one claim costs over five years
We calculated a 2026 example with a base premium of €600 a year and the French rules above, rounding the coefficient down to two decimals each year, which reproduces the French scale. The driver has reached 0.76 after five clean years; in one scenario they stay claim-free, in the other they have one at-fault claim just before year 1.
| Year | No claim: coefficient | Premium (2026 example) | One at-fault claim: coefficient | Premium (2026 example) |
|---|---|---|---|---|
| 1 | 0.76 | €456 | 0.95 | €570 |
| 2 | 0.72 | €432 | 0.90 | €540 |
| 3 | 0.68 | €408 | 0.85 | €510 |
| 4 | 0.64 | €384 | 0.80 | €480 |
| 5 | 0.60 | €360 | 0.76 | €456 |
One at-fault claim costs about €516 in extra premiums over the next five years in this 2026 example, and the driver is still well behind at the end. That is why ADAC notes that paying a small claim yourself can be worthwhile to avoid being moved down the scale. Before you claim for minor damage, compare the repair bill with the extra premiums over several years.
Age, gender and experience
Young drivers usually pay the most, because insurers regard them as a higher risk. The gap narrows as they build up claim-free years and their bonus grows.
Gender is no longer allowed as a pricing factor in the EU. Wikipedia's summary of the case notes that on 1 March 2011 the European Court of Justice ruled that using gender as a risk factor breached EU equality law. As a result, premiums for men fell and premiums for women rose.
Moving to another EU country: take your record with you
A claims-free record is worth money, so do not lose it when you move. Directive (EU) 2021/2118, the latest update of the EU Motor Insurance Directive, harmonises the content and format of the claims history statement. It also requires insurers to treat a statement issued in another member state as equivalent to a domestic one, so your no-claims bonus or bonus-malus rating can count in your new country. The European Commission adopted a common template for the statement in Implementing Regulation (EU) 2024/1855, in force since 24 July 2024.
According to the EU's Your Europe portal, you can ask your insurer for the statement at any time. It covers claims over the last five years, and the insurer must provide it within 15 days on the standard EU form. A new insurer may not treat you unfairly or charge extra because of your nationality or where in the EU you lived before. Ask for the statement before you cancel your old policy, and keep a copy.
12 ways to pay less for car insurance
- Stay claim-free. Each year adds bonus; in France it takes about 13 years to reach the maximum.
- Pay small damage yourself when the extra premiums would cost more than the repair.
- Choose a car with a low insurance class. Shortlist with our car finder, then get quotes for the exact model before you buy.
- Pick a sensible excess. A higher excess lowers the premium, ADAC notes, but only choose an amount you could pay tomorrow.
- Declare a realistic annual mileage. Lower mileage usually means a lower premium, and some insurers offer low-mileage discounts.
- Park in a garage if you have one, and say so: ADAC lists it among the price factors.
- Limit the drivers. ADAC lists who uses the car as a price factor, so a policy limited to named drivers is usually cheaper than one open to anyone.
- Consider telematics. Pay-as-you-drive and pay-how-you-drive policies use a device or an app to price your actual driving.
- Match the cover to the car. Full cover on an old, low-value car may cost more than it can ever pay out; our guide to third-party versus comprehensive insurance explains when partial cover is enough.
- Compare at renewal. In Germany, most contracts can be cancelled if the letter reaches the insurer by 30 November, ADAC notes.
- Bring your record when you move within the EU: ask for the claims history statement.
- Check what is already covered. Breakdown cover, legal expenses or GAP insurance may duplicate cover you already have.
Who should shop around hardest: young drivers, owners of powerful or frequently stolen models, and anyone whose car has moved up a type class. For them, the choice of car and the excess often save more than any discount code.
Try our calculator
Cost of ownership calculatorFAQ
How is car insurance calculated?
The insurer estimates how often a driver like you, with a car like yours, used where and how you use it, makes a claim and how much it costs. Your claims history, age and experience, the car model, your address, annual mileage and the cover and excess you choose are the main inputs.
What is a bonus-malus system?
A scale that lowers your premium after each claim-free year and raises it after an at-fault claim. In France the coefficient starts at 1.00, falls 5% a year to a minimum of 0.50 and rises 25% for each at-fault claim, up to 3.50.
Does a claim always increase my premium?
Not always. In France theft, broken glass, fire and natural disasters do not count towards the malus. At-fault accident claims usually do, so compare a small repair bill with the extra premiums before claiming.
Can I use my no-claims bonus in another EU country?
Yes. Since the 2021 update of the Motor Insurance Directive, insurers must treat a claims history statement from another EU member state as equivalent to a domestic one. Ask your old insurer for the statement before you move.
Why does the car model change my premium?
Because models differ in how often they are involved in claims and how much those claims cost. In Germany the GDV sets type classes from 10 to 25 for liability and up to 34 for full cover, based on each model's claims statistics.
Sources
- ADAC: Was ist der Unterschied zwischen Kfz-Haftpflicht, Teilkasko und Vollkasko? (price factors, SF class) (accessed 23 Oct 2026)
- ADAC: Neue Typklassen der Kfz-Versicherung 2026 (10 November 2025) (accessed 23 Oct 2026)
- MACSF: Le bonus-malus en matière d'assurance automobile (27 February 2023) (accessed 23 Oct 2026)
- Wikipedia: Bonus–malus (accessed 23 Oct 2026)
- Wikipedia: Vehicle insurance (EU minimum cover, 2011 ECJ gender ruling, telematics) (accessed 23 Oct 2026)
- Ganado Advocates: Amendments to the Motor Insurance Directive come into force across the EU, the key changes (Directive (EU) 2021/2118) (accessed 23 Oct 2026)
- EUR-Lex: Commission Implementing Regulation (EU) 2024/1855 (claims history statement template) (accessed 23 Oct 2026)
- Your Europe (European Union): Car insurance validity in other EU countries and claims history statements (accessed 23 Oct 2026)
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