No claim bonus

This discount program is generally provided to those who take out comprehensive car insurance. It is not usually available through any Third Party Property Damage (TPPD) and Third Party Fire and Theft (TPFT) policies. Typically, your no claim discount is contained to the one car insurance provider. However, 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 or if you purchase a new car). Generally, your ratings can be likened to a loyalty program that rewards you for staying claims-free with one insurance provider.

The no claim bonus rating system can 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 (or vice versa depending on the insurer’s system used). The discount then increases for each consecutive year you hold cover and don’t make an at-fault claim.

Your no claim discount is typically capped after a set number of years (some may be capped at 5 years, others up to 10 years). This is the maximum discount your insurer will offer you.

The no claim bonus is calculated in various ways through a rating system based on your number of claims-free years. This will depend on your insurance provider. However, they are likely to begin this process in your second year under contract with the same provider. If your insurance provider offers you a no claim 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-claim bonus will be calculated using the following factors:

• The number of years you have had the policy
• Your claims history
• Your rating carried over from any previous car insurer

Some insurers may allow you to carry over your existing no claims rating from your previous insurer to a new policy. How insurers apply this discount to a new policy may be different. For example:

• Some insurers do not allow you to transfer your rating to a different insured vehicle.
• Some insurers may limit or cancel your rating if you don’t drive for a certain number of years (usually over two years).

Always check the relevant Product Disclosure Statement (PDS) and the Target Market Determination (TMD) of your insurance policy to see whether your no claim bonus rating can be transferred across to any new policy.

Not all insurers in Australia operate the same way. Different terms and conditions may apply as to how your no claim bonus is affected by an insurance claim (whether you’re at fault or not). For some insurers, your no claim bonus may not be affected if you make a claim where you are not at fault. For many insurers, if a car insurance 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 claim 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 claim discount.

Not all car insurance providers offer no claim bonus protection, so always check the PDS to see if it’s included.

No, your no claim discount or bonus is typically applied as a discount on your premium. A premium can be raised when a policy is renewed for several reasons, some of which may be out of your control and unrelated to your safe-driving rating or driving experience. Sometimes a discount increase to your no claim bonus could offset a premium increase.

In most cases, your no claim 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 depending on the situation.

If your rating isn’t affected (e.g. you have the bonus protection), your insurance premium may rise to reflect your new claims history.

Generally, your no claim 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.