Glossary
Claims-free discount, defined
A premium reduction granted to a policyholder who has gone a set number of years without filing a loss, on the reasoning that past behaviour predicts future losses. It is common on auto and home policies and grows with the length of the clean period at some carriers.
In practice
The credit is one reason a small claim can cost more than it pays: filing it removes the reduction for several years and may add a surcharge, so a loss barely above the deductible is often better absorbed. Whether a not-at-fault auto claim or a weather claim on the home counts against it varies by carrier and by state rules, and asking before filing is wise. Comprehensive glass claims are frequently excluded from the count. The clean period usually follows the person, not the policy, so it survives a change of carrier if the prior insurer's loss history confirms it. Accident forgiveness is a separate feature that protects against the surcharge, not the same thing as this credit.
A worked example
Suppose a homeowner with a $1,000 deductible has a $1,900 water leak repair. Filing recovers $900. Suppose the carrier's credit is worth $150 a year and would be lost for five years, and a surcharge adds $100 a year for three years; the filing costs about $1,050 over time to recover $900. Absorbing the loss is the better arithmetic. Hypothetical figures.
Applies to: Home InsuranceAuto Insurance