No claims discounts and car insurance explained

Everyone likes safe drivers, especially insurance companies. That’s why some will offer a “no claims discount” or “no claim bonus” to reward safe drivers.
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What is a no claims discount and is it the same as a no claim bonus?

Yes, a no claim discount and no claim bonus are the same thing. In fact, no claim discounts actually have quite a few other names: safe driver reward, no claim bonus rating scheme and no claim bonus rating level. But they all mean the same thing.

A no claims discount, or no claims bonus, is a reward offered by some insurance providers to safer drivers1. This is typically only for comprehensive car insurance. After that, 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 bonus may increase your discount, overall premiums may still increase at each renewal period.

How is a no claims bonus/no claims discount calculated?

While all insurers are different, when calculating your no claims bonus, your insurer will likely look at the following:

  • Your claims history;
  • How long you’ve been driving for;
  • Your rating from your previous car insurer (if applicable).

How does the no claims bonus/no claims discount affect the cost of insurance?

Well, obviously the best thing about a no claims bonus or no claims discount is the reduced cost of insurance. Most insurance providers have different ways of applying it. So have a look over the terms and conditions. For example, some insurance providers might limit how long you can get the discount for or set a minimum premium amount.

How is my no claims bonus/no claims discount affected if I make a claim?

If you have an accident and you make a claim, your insurer will most likely re-evaluate your bonus. Generally, if the accident is your fault and you make a claim, you’ll either lose your discount or it might be reduced. If you can prove the accident wasn’t your fault, your insurer may not make any changes.

For example, let’s say you were out one day taking your new...Lamborghini for a cruise. You drove up to a set of lights and saw them go from orange to red, so you slowly put your foot down on the brake and came to a halt. The car behind you didn't see the lights change, and they unfortunately drove straight into the back of your very good-looking vehicle. Some insurers would look at the circumstances of this accident and note that it wasn’t your fault. So they’d leave your no claims bonus/discount as is.

But there are some cases where insurers may still increase your premium when you’re not at fault:

  • If they’re not able to recover the costs of your claim from the other driver;
  • Or the accident is considered ‘at fault’. Like theft, hitting an animal or windscreen damage.

Will I still have my no claims bonus if I buy a new car or change policies?

Changing Policies

If you change policies, some insurers will let you bring across your existing no claim bonus to your new policy.

New Car

If you buy a new car, usually your bonus won’t be carried across from your old car. But you should check with your insurance provider to be sure.

How do I compare car insurance policies?

Even if you have an awesome rating level or no claim bonus, it could be beneficial to compare your car insurance policy on a regular basis, as you might find a better deal elsewhere. Good news is, this is something we can help you with! Call 13 19 20 and one of our friendly consultants will help you compare car insurance from our range of policies and insurers.


Last updated: 4/03/2021