How does the Dutch bonus-malus system work?

Insurance premiums in the Netherlands differ based on your no-claims status. The longer you have been insured without claiming damages, the cheaper your new premium. This bonus can add up to a discount of as much as 80%. If you make a claim for damages, your no-claims status will often be downgraded and your premium will go up (malus). You can protect your premium by purchasing additional ‘bonus protection’ cover.