No Claims Discounts for Car Insurance Explained

What is a no claims discount?

A no claims 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 those who don’t claim on their insurance.  

A no claims 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. 

How is a no claims discount calculated?

While all insurers are different, when calculating your no claims bonus, your insurer is likely to consider the following: 

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

Generally speaking, ratings 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 any claims for the past five years.

How much can I save with a no claims discount?

How much a no claims discount reduces the cost of your car insurance policy will vary from provider to provider. 

Most insurance providers have different ways of applying it, 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 my no claims 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 claims discount. 

Generally, 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 is damage from external factors (such as vandalism or natural causes) or the person at fault cannot be identified you may lose some of your no claims benefits.

For example, let’s say you were out one day taking your new set of wheels 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 stop. The car behind you didn’t see the lights change, and they unfortunately drove straight into the back of your poor car… 

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 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 if the accident is considered ‘at fault’. Like 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

How can I protect my no claims discount?

Some insurers offer you the ability to pay extra so that your no claims discount is not affected in the event you need to 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 claims discount may be more than your discount itself.  

It may not necessarily be a foolproof way to stop your premium from increasing after making a claim. 

Where can I find my no claims 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 

Can I provide my new insurer proof of my no claims discount rating?

Some insurers may allow you to transfer your no claims 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 claims 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, then you may lose your no claims discount rating.

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

Changing policies 

If you change policies, some insurers may let you bring across your existing no claims discount to your new 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.

How do I compare car insurance policies?

Even if you have a great no claims discount rating level, it could be beneficial to compare your car insurance policy on a regular basis, as you might find a better deal elsewhere.