Premiums
Bonus levels/premium levels in car insurance
Insurers use a bonus system to calculate the premium amount. Find out here how this works, what premium levels have to do with it and what happens in the event of a claim.
16.02.2022
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1. What is the bonus system used in Switzerland?
Swiss car insurance companies use a bonus system to calculate your premium. In this context, "bonus" refers to a credit or discount that is applied to car insurance. The system works both ways, however, with negative factors incurring a penalty or surcharge.
It has a significant effect on how your premium might change over time. The principle is simple: the fewer claims the insurance company has to settle, the lower your premium will be. Conversely, the more you claim, the higher the premium you will have to pay.
A bonus system is always used for third-party liability and collision casco insurance. In the text that follows, you will see how the insurers put this system into practice.
2. What is a bonus or premium level?
The fundamental component of car insurance is the premium. It is calculated on the basis of the insured vehicle and certain risk criteria relating to the driver (e.g. is the car kept in the garage overnight? Is it leased?).
This premium is quite high and virtually no one needs to pay this much, because personal criteria are also taken into account (e.g. how old are you? How long have you been driving? Have you caused any damage in the last few years?).
The insurance company uses these personal criteria to set your premium level, which could be 65%, for example. In other words, you only have to pay 65% of the premium that was originally calculated.
3. Bonus levels in car insurance: how many are there and what are they?
Some insurers have a lowest premium level of around 30% for cars, while others set theirs at 45%. The bonus levels for liability and partial and collision casco insurance are calculated separately and do not have to be the same.
4. When will the premium level increase?
After a claim is paid out, the insurance company raises the premium starting from the following year of insurance. It usually goes up four levels. If you then have a year without incident, the premium will drop again in the following year. Note that the increments – and therefore the premium increase following a claim – vary depending on the insurer. It is therefore worth comparing the details carefully.
5. How long does a bonus level apply?
If you are not yet at the lowest level of the bonus system, the level drops by a few percentage points each year, i.e. you pay a little less each year until you reach the lowest level and the premium stays the same.
The advantage is that once you have reached the lowest premium level, if you make a claim, the premium becomes only slightly more expensive, as the lower levels are generally much closer together than the higher ones.
Each insurance company calculates premium levels individually, so if you switch to a different insurer, your premium level will be recalculated. Most insurance companies ask whether you have made any claims in recent years. If you haven't had any accidents, this will also be taken into account when switching insurer.
6. Higher bonus level following an accident: two examples
How an accident affects your premium level depends on a range of factors. The following two examples provide an illustration.
New driver: Andrew
Andrew has just passed his test. He takes out a policy covering third-party liability and full casco insurance. He is assigned to level B8 and pays 80% of the premium. This works out at 1,920 francs per year.
Andrew accidentally drives into the back of a car, causing damage to both vehicles. His insurance covers the damage in both cases. However, Andrew has an excess of 1,000 francs for both liability and full casco insurance, because he is a new driver.
An excess of 1,000 francs was also agreed for collision casco insurance. In addition, he will move up from B8 to B12 for both liability and collision casco insurance, which means he now pays 120% of the standard premium with this insurance company.
So although Andrew does not have to pay for the damage himself, there are some costs he will still have to cover. These are:
Liability excess: CHF 1,000
Collision casco excess: CHF 2,000
Higher premium following increase in bonus level from B8 to B12, i.e. from 80% to 120%*: CHF 2,400
Total cost of the road accident: CHF 5,400
Experienced driver: Victoria
Victoria's been driving for 20 years and has reached the lowest bonus level of B0, i.e. 30%. She pays 720 francs per year.
Victoria also accidentally drives into the back of a car, causing damage to both vehicles. Because of her driving experience, an excess no longer applies to her liability insurance, and she agreed an excess of 1,000 francs with the insurer for her collision casco.
Victoria also has the damage paid for and is moved up from level B0 to B4, i.e. to 45%. Even though she has been penalized by the same number of levels, she doesn't have to pay as much as Andrew:
Liability excess: CHF 1,000
Higher premium following increase in bonus level from B0 to B4, i.e. from 30% to 45%*: CHF 912
Total cost of the road accident: CHF 1,912
* The premium increase applies to the next 4 years, until level B8 (80%) or, in the case of Victoria, level B0 (30%) is reached. Andrew pays 120% in the first year, 110% in the next, 100% in the third and 90% in the fourth. In the fifth year, he is back down to 80%, where he originally started. The same goes for Victoria: she pays 45% in the first year, 41% in the second year, 38% in the third and 34% in the fourth. She is then back at the level of B0, which is 30%.
7. How can I prevent the premium level from going up?
Taking out bonus protection insurance can prevent your premium from going up. This add-on could have saved Andrew 2,400 francs and Victoria 912 francs in additional costs. Learn more about bonus protection and when it's most worth taking out.
This article was first published on 01.09.2021