A no claims bonus, otherwise known as a no claims discount, is a discount program offered by some insurers who provide comprehensive car insurance to reward safe drivers’ good behaviour behind the wheel, using the no claim bonus rating system.
This discount program is usually contained to the one car insurance provider, although some providers will permit you to carry over your rating if you decide to switch insurers (as long as you’re insuring the same vehicle through which you accrued your bonus). Generally, your ratings can be likened to a loyalty program that rewards you for staying claims-free with the one insurance provider.
Some insurers will offer no claims bonus protection for an extra premium, so if you do need to make a car insurance claim, your no claims rating is not impacted.
The no claims bonus is calculated in various ways through a rating system based on your number of claims-free years, depending on your insurance provider. However, they are all likely to begin this process in your second year under contract with the same provider. If your insurance provider offers you a no claims bonus, your entitlements should begin to accrue after a year free from any claims. Then, as each year passes without a claim, the discount may increase.
Typically, your no-claims bonus will be calculated using the following factors:
The no claims bonus rating system will differ between insurance providers. For example, an insurer may assign a policyholder a ranking from one to six, with one being the highest discount rating you can reach. Therefore, the lower your number on the scale, the higher your discount will be. The discount then increases for each consecutive year you hold cover and don’t make an at-fault claim.
Your NCB is typically capped after a set number of years (some will be capped at 5 years, others up to 10 years), which is the maximum discount your insurer will offer you.
Not all insurers operate the same way. Different terms and conditions may apply as to how your no claims bonus is affected by a claim (whether you’re at fault or not). For some insurers, your no claims bonus may not be affected if you make a claim where you are not at fault. For many insurers, if a claim is made where you are at fault, you may either stand to lose your bonus or have it reduced depending on the circumstance.
Even if you’re not at fault, you could face an increase in your car insurance premiums despite having a high no claims rating.
No claim bonus protection is a way to safeguard your no claims bonus for car insurance by paying extra to keep your rating following an at-fault claim against your insured vehicle.
This optional extra only protects your rating; your insurance premiums may still increase due to other factors. In some cases, the amount you pay for protection can be more than the savings you make from your no claims discount.
Always check the relevant Product Disclosure Statement (PDS) of your insurance policy to see whether no claim bonus protection is available to you.
Some insurers may allow you to carry over your existing no claims rating from your previous insurer to a new policy. In most instances, you must provide proof of your rating in order to transfer your rating; this can include a previous policy renewal.
How insurers apply this discount to a new policy may be different. For example:
Please check your PDS to see if this is applicable to your current policy.
Generally, your no claims bonus is not affected by a claim for windscreen or window glass damage only. You may be required to pay an excess for these claims, but your rating is likely to be unaffected.
No, your no claims discount or bonus is typically applied as a discount on your premium. A premium can be raised when a policy is renewed for a number of reasons, some of which may be out of your control and unrelated to your safe-driving rating or driving experience. Sometimes an increase to your no claims discount could offset the impact of a premium increase.
In most cases, your no claims bonus would be affected if your insured vehicle is stolen and you make a claim for this loss. Some insurers may set back your rating two years unless you have the no claims bonus protection.
If your rating isn’t affected (e.g. you have the bonus protection), your insurance premium may rise to reflect your new claims history.
In the market for a new car insurance policy? A smart idea would be to compare car insurance with our free, easy-to-use comparison service. Just enter in some details about you and your car – such as your current no claims bonus rating – and you can compare from a range of policies all in one place. Simples!
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