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No-Claim Discounts for Car Insurance Explained
No-Claim Discounts for Car Insurance Explained
Written by
Kervin Mathew
Edited by
Ellie Garran
Reviewed by
Toby HagonCompare car insurance policies the easy way
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Long story short
Save on premiums by staying claim-free
A no-claim discount can shave between 3% and 15% off your car insurance if you stay claim-free for one to five years.
The no-claim discount works on a ratings system
Insurers rate you from 6 to 1. The longer you go without claiming, the better your rating and the bigger your discount.
Discounts can vary between insurers
Every insurer calculates no-claim discounts differently. Some cap the savings, while others may not let you transfer your rating if you switch providers.
Making a claim can set you back
An at-fault claim could set your no-claim discount rating back by at least two years. Even a not-at-fault claim might impact your discount.
How does the no-claim discount work?
A no-claim discount (also known as a safe driver reward, no-claim bonus rating scheme, or no-claim bonus rating level) is a reward offered by some insurance providers to safe drivers and people who don’t claim on their insurance.1For more information, see Moneysmart.gov.au – No claim bonus on car insurance
A no-claim discount is more commonly offered with comprehensive car insurance policies. The discount usually increases each year you don’t claim until it reaches a maximum.
It’s important to remember that while your no-claim discount may increase your savings, overall premiums may also still increase at each renewal period. Say, you inform your insurer that you’ve moved to a busier neighbourhood, or you’ve added an additional driver to your policy. This can change your risk profile and, in turn, might increase your premium.
How much can I save with a no-claim discount?
It depends on how long you can go without making an at fault claim.
The amount a no-claim discount reduces the cost of your car insurance policy will vary from provider to provider. Generally, insurers will rate you on a scale of 6 to 1 for the number of years you haven’t made an at-fault claim. Based on your rating, they can then apply a discount to your premium. Here’s what those discounts might look like:
An example of a no-claim discount rating system
| Claim-free years | No-claim discount rating | Discount |
| 5 | 1 | 15% |
| 4 | 2 | 12% |
| 3 | 3 | 9% |
| 2 | 4 | 6% |
| 1 | 5 | 3% |
| 0 | 6 | 0% |
Most insurance providers have different ways of applying a no-claim discount. So have a look over your insurer’s specific terms and conditions in your product disclosure statement (PDS).
Keep in mind that some insurance providers might limit how long you can get the discount for, or set a minimum premium amount.
How is a no-claim discount calculated?
While all insurers are different, when calculating your no-claim bonus, your insurer is likely to consider the following:
- your claims history
- how long you’ve been driving
- your rating from your previous car insurer (if applicable)
- how long you’ve held a comprehensive car insurance policy.
Ratings usually start at 6 and reduce by one for each year that you don’t claim. So a driver with a rating of 1 wouldn’t have made a claim for the past five years.
How is my no-claim discount affected if I make a claim?
If you have an accident or your vehicle sustains damage and you make a claim, your insurer will most likely re-evaluate your no-claim discount.
If the accident is your fault and you make a claim, you’ll either completely lose your discount or it might be reduced. Similarly, if there’s damage from external factors (such as vandalism or natural causes) or the person at fault can’t be identified, you might lose some of your no-claim benefits.
If you can prove the accident wasn’t your fault, your insurer may not make any changes.
Let’s consider this scenario.
You’re taking your shiny new set of wheels for a cruise and the traffic lights go from green to orange. You slowly bring your car to a stop (as you should), but a less attentive driver behind you has other ideas. The next thing you know is your immaculate ride ends up with more than a dent in it.
But all is not lost! Insurers would look at the circumstances of this accident and note that it wasn’t your fault. So, your no-claim discount remains intact (unlike your car’s boot!).
Be mindful, though, that there are some cases where insurers may increase your premium even when you’re not at fault:
- if they’re not able to recover the costs of your claim from the other driver
- if the accident is considered ‘at fault’ anyway. This could potentially include theft, hitting an animal, or windscreen damage.
Helpful tip:
Sometimes you may be better off paying for minor damage to your car rather than claiming and risking your no-claim discount. If you are a rating 1 driver – with maximum no-claim benefits – losing those benefits could result in higher premiums for years to come.
Toby Hagon
Motoring Journalist
Frequently asked questions
Where can I find my no-claim discount rating?
There are a few ways that you might be able to check your rating:
- log in to your online car insurance account
- check your certificate of insurance, which should have been sent to you when you first took out your policy
- check your most recent renewal notice
- call your insurer and speak to them over the phone.
Is my no-claim discount applied automatically?
Yes. Your insurer should automatically apply your no-claim discount to your premium at the time of renewal. You can check your renewal notice or insurance certificate to see the no-claim discount and how it’s been applied to your premium.
Is it worth paying to protect my no-claim discount?
Some insurers allow you to pay extra so that your no-claim discount is not affected when you make a claim.
If you decide to pay for this protection, then make sure you read the terms and conditions in your product disclosure statement (PDS). It’s possible that the cost of protecting your no-claim discount is more than your discount itself.
It may not necessarily be a foolproof way to stop your premium from increasing after you make a claim.
Can I transfer my no-claim discount rating?
Some insurers may allow you to transfer your no-claim discount rating over if you’re switching providers.
You can contact your current insurer to send you a notice with proof of your rating, or you can check your previous renewal notice for an indication of your no-claim discount.
Your new insurer may then take your discount into consideration when they calculate your premium.
If you haven’t driven for two years or more, you may lose your no-claim discount rating.
Will I still have my no-claim discount if I buy a new car, or change or cancel my policy?
New car
If you buy a new car, usually your bonus won’t be carried across from your old car’s policy, but you should check with your insurance provider to be sure.
Changing policies
If you change policies, some insurers may let you bring across your existing no-claim discount to your new policy.
Cancelling a policy
If you cancel a policy, you must buy a new policy within 12 months to keep your no-claim discount. Otherwise, it’s back to square one and that’s a rating of 6.
How do I compare car insurance policies?
Even if you have a great no-claim discount rating level, it could be beneficial to compare your car insurance policies on a regular basis. You might find a better deal from our range of providers.
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