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No claims car insurance

A no claims bonus (NCB), also known as a no claims discount, is a discount you receive on your car insurance premium for every year you don't make a claim. The longer you go without filing a claim, the greater your discount becomes, rewarding your safe driving.

Now, let's peek inside and learn how this bonus works, how you can maximise your savings, and what to consider when managing your NCB.

How does the no claims bonus work?

So how does the NCB actually function in your car insurance policy? First of all, it’s important to note that not all insurance providers offer an NCB, and its availability shouldn't be the sole factor in your decision-making process. While the NCB is a valuable perk, it's just one of many considerations when choosing the best insurance policy for your needs.

But let’s say you do go with a policy that offers an NCB. Here’s how it will play out:

  • Year-on-year reduction. Each year you don’t make a claim your ‘discount rating’ improves. The higher your discount rating, the bigger your discount, and the cheaper your premiums will be. 
  • Achieving the best rate. After five straight years of not making a claim, you’ll achieve the highest discount rating possible, which is Rating 1, which will lead to the maximum discount possible.
  • The effect of making a claim. If you wind up making a claim, it’s not the end of the world. Your rating will likely decrease by 2 years, but you can gain this back over time.

Thankfully, certain types of claims, like those where you’re not at fault, won’t diminish your score. The exact types of claims you can make without losing your bonus will be different depending on the insurer, so it's a good idea to look at this if you're planning on growing a no claim bonus.

What discounts are available with a no claims bonus?

The discount you receive usually depends on the type of licence you hold, the history of your driving record and how many years you have not made a claim on your car insurance.

Below is a guide for full licence holders. Remember, this is a guide only and the discount and calculations will vary between insurance providers:

Years without claim
Average discount

5% to 20%
2
10% to 30%
3
20% to 40%
4
30% to 60%
5+ (Rating 1)
65%

What providers offer a no claims discount?

There’s no shortage of providers offering no claims discounts. Here are some of the most prominent. 

Remember, every insurance company offering a no claims discount has its unique approach and criteria for the discount. The percentage of discount, the number of claim-free years required to reach the maximum discount, and how claims affect your discount can vary significantly. Therefore it’s important to read your product disclosure statement (PDS) carefully and ring up customer service if you have any questions.

Award-winning policies with no claims bonuses

Mozo may receive payment if you click to the website of one of the products below. Mozo does not compare the entire market, but you can see more products by clicking on the ‘See more’ button under the table.
Important information on terms, conditions and sub-limits.
Last updated 19 July 2024 Important disclosures
Budget Direct - Gold Comprehensive Car Insurance*
  • 3-15% no claims discount
  • 15% discount on your first year’s premiums if you buy online (T&Cs apply)
  • Award-winning policy

Budget Direct, clinching the 2023 Mozo Experts Choice Award for Best Value Car Insurance^ offers a No Claims Discount of 3-15% based on your discount rating, with rating 1 achieving the full 15%. This, combined with the online sign-up discount and highly competitive premiums, positions Budget Direct as a leading choice for cost-effective and comprehensive car insurance. Note: Budget Direct maintains competitive pricing by offering some cover options as add-ons, which keeps things flexible but means your price could increase the more you add on.

GIO Comprehensive Car Insurance*
  • 5-20% Claims Free Savings
  • 10% discount on your first year's premiums if you purchase online (T&Cs apply)
  • Lifetime repair guarantee
Find out more

Awarded the 2023 Mozo Experts Choice for Best Quality Car Insurance^, GIO rewards safe drivers with up to 20% off for 15+ claims-free years on both their Comprehensive and Platinum Cover. Secure an additional 10% discount on your first year's premium when buying online, plus a host of other possible discounts including family discounts and multi-policy discounts. Note: GIO covers you for an ‘agreed’ value, meaning the payout is based on a predetermined amount, offering certainty but requiring periodic reviews to match your vehicle's value.

What happens to my no claims bonus if I switch insurers?

Switching insurers? No worries! Your NCB can typically tag along when you switch to a new insurer, as long as the new insurer also offers it as a perk. 

You'll likely need to show some proof of your clean driving slate, such as a renewal notice or a confirmation letter from your previous insurer. 

But it’s worth repeating, if you’re shopping around for a new insurance company, don't let the NCB be the only thing that guides your decision. It's important to look at the bigger picture—things like customer service, coverage options and overall policy costs.

What is no claims bonus protection?

After years of careful driving, you've earned a valuable no claims discount. Naturally, you'd want to protect it. The good news is, many insurance companies offer a way to safeguard your NCB, even if you need to make a claim that might usually ding your discount rating.

This protection is available at an extra cost and is designed to ensure that your NCB remains intact after making certain types of claims. Typically such protection covers scenarios where the accident isn't your fault—like being hit by an uninsured driver or someone failing to leave their details after a bump in a car park.  

Make sure you consult your product disclosure statement for detailed information, including any specific exceptions or conditions. 

What types of claims will affect my no claim bonus?

Generally, claims where you are deemed at fault could potentially reduce your NCB. However, not all claims will necessarily affect your bonus. In fact, it’s more useful to look at which types of claims generally don’t affect your discount. These include:

  • If the accident wasn't your fault and the at-fault party can be identified
  • If the damage was caused by severe weather, like hail
  • If the claim is solely for window glass damage
  • If you have NCB Protection, which may safeguard your NCB under certain conditions

Knowing which claims do and don't impact your no claim bonus is key, so you can make informed decisions about when it's strategic to claim and when it might be wise to handle minor issues independently.

As a young driver, how can I improve my NCB?

As a young driver looking to boost your no claim bonus (NCB), you might notice it doesn't stack up to what seasoned drivers are getting. It's because insurers see younger drivers as having a higher risk, so you've got to show over time that you're in it for the safe long haul to earn those discounts.

The takeaway here? Stick to safe driving to sidestep accidents. It's the clearest route to growing your NCB and keeping it strong. Keeping it simple pays off.

Mozo Editorial
Mozo Editorial

Mozo’s team of experienced journalists and money experts provide news, insights, practical guides and expert analysis to help you master your personal finances. We follow editorial guidelines that focus on accuracy, reliability and timeliness; helping you make informed financial decisions with confidence and the most of your hard-earned money.

* Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.

^See information about the Mozo Experts Choice Car Insurance Awards