No Claims Bonus Explained
A No Claims Bonus can help decrease the cost of your car insurance - our guide outlines how they work, what insurers offer No Claims Bonuses and must-know facts.
Updated 30 January 2023
Know This First: You may have a policy with a no claims bonus and, without making a claim, find your insurance premium increases year after year. This can happen for many reasons - we suggest comparing car insurance quotes just before renewal time to potentially save a few hundred dollars. Many insurers no longer offer No Claims Bonuses - if you're in any doubt about your policy and entitlement, contact your insurer and ask them if you're eligible and/or already receiving the benefit.
Our guide covers:
Know This First: You may have a policy with a no claims bonus and, without making a claim, find your insurance premium increases year after year. This can happen for many reasons - we suggest comparing car insurance quotes just before renewal time to potentially save a few hundred dollars. Many insurers no longer offer No Claims Bonuses - if you're in any doubt about your policy and entitlement, contact your insurer and ask them if you're eligible and/or already receiving the benefit.
Our guide covers:
What is a no claims bonus?
If you drive for a year without making a car insurance claim, your insurer sees you as a lower risk. To reward you for being a safer driver (and a more profitable customer), many car insurers offer no-claim bonuses, which are is a discount on your policy renewal. The longer you have a policy and don't claim, the larger the no claims bonus could be.
You will be eligible for a no claims bonus if you haven't made any claims over a specific time. Car insurers aren't clear about how much it is, and some insurers don't offer them at all being one. If you have a no claims bonus and later make a claim, you may lose your bonus and/or face higher insurance costs when you renew.
Insurers who offer no claims bonuses allow customers to keep them as a reward for being a low-risk driver. Some insurers will also allow you to claim when specific incidents happen (i.e. windscreen chipped, smashed window etc.) without losing your no claims bonus.
Video Explainer
MoneyHub Founder Christopher Walsh explains what a no claims bonus is, what insurers offer it, how you retain (and lose) it, and how it can lower your car insurance renewal.
Warning - no-claims bonuses don't mean your car insurance costs will decrease when you renew. We suggest always comparing quotes just before your renewal date to help you save money and avoid a 'loyalty tax' from your insurer
You will be eligible for a no claims bonus if you haven't made any claims over a specific time. Car insurers aren't clear about how much it is, and some insurers don't offer them at all being one. If you have a no claims bonus and later make a claim, you may lose your bonus and/or face higher insurance costs when you renew.
Insurers who offer no claims bonuses allow customers to keep them as a reward for being a low-risk driver. Some insurers will also allow you to claim when specific incidents happen (i.e. windscreen chipped, smashed window etc.) without losing your no claims bonus.
Video Explainer
MoneyHub Founder Christopher Walsh explains what a no claims bonus is, what insurers offer it, how you retain (and lose) it, and how it can lower your car insurance renewal.
Warning - no-claims bonuses don't mean your car insurance costs will decrease when you renew. We suggest always comparing quotes just before your renewal date to help you save money and avoid a 'loyalty tax' from your insurer
How long can I keep 'earning' a no claims bonus?
It depends on the insurer, and it's not public information. However, historical data suggests no claims bonuses increase until you reach five continuous years of no claims.
If I make a claim, how is my no claims discount affected?
Firstly, some insurers allow specific claims that don't affect your no claims bonus. Such instances include an accident that's not your fault (i.e. someone crashed into your car).
​No Claims Bonuses - Pros and Cons
Pros:
Cons:
- You'll receive a discount on your policy as you're a lower risk to the insurer.
- Many policies allow claims that protect your No Claims Bonus - for example, lost keys and/or an accident you didn't cause.
Cons:
- You're tied to one insurer, as the benefit is rarely able to be transferred.
- Your policy may still go up in price - a No Claims Bonus doesn't protect you from other risk factors.You may be paying more than you should for your car insurance, even with a No Claims Bonus applied.
What Insurers Offer No Claim Bonuses?
The insurers below specifically mention a No Claims Bonus benefit in their policies - we're unable to find similar mentions in policies from AA Insurance and State Insurance, while Cove Insurance confirmed they don't offer such benefits. Other insurers such as MAS offer no claims bonuses, but given they don't offer direct quotes or online policies, we're unable to provide any pricing details.
Right now, we believe these three major insurers are the leaders in offering No Claims Bonuses:
Right now, we believe these three major insurers are the leaders in offering No Claims Bonuses:
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AMI No Claims BonusesAMI offers both a No Claim Bonus discount and a program called freeBmax. freebMax allows you to make up to two claims that would have normally reduced your No Claim Bonus discount in any 12-month period.
More details: You can read more about freeBmax here |
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Tower No Complains BonusTower states that if you’re eligible for a no claims bonus, they will adjust your premium to reflect this. Furthermore, you’ll keep your no claims bonus and you won’t pay an excess if you’ve been involved in an accident during the period of insurance where you're not at fault and you can identify the person at fault.
More details: Please see Tower's policy wording |
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Trade Me Insurance offers both a No Claim Bonus discount. As outlined on its website, if you go a year without a claim, you will receive a no claims bonus. If you then go another year without a claim, your no claims bonus will be increased further until you reach the the highest discount available. Trade Me Insurance does not specify what the highest discount will be. If you need to claim, Trade Me Insurance confirms you'll only go down one step.
More details: You can read more about the No Claims Bonus in the policy document. |
No Claims Bonuses - Frequently Asked Questions
Can I keep my no claims bonus if I switch car insurance companies?
It's unlikely unless you can prove your existing no claims bonus amount.
How can I get proof of my no claims discount?
Some insurance providers will include details of your no claims discount on your insurance renewal or cancellation notice. Others will send a letter with the details. Some insurance providers may not tell you at all, and you'll have to contact them.
Can I lose a no claims bonus, or can it expire?
Yes – there are a few ways this can happen:
- As expected, if you claim on your policy (or claim more than any pre-existing claim allowance), your no claims bonus or any discount will be reduced or removed.
- If you add a new principal driver to your policy )who doesn't qualify for the No Claim Bonus).
- You don't renew your policy, and it lapses, and a new policy needs to be written when you repurchase the policy.
If I change from comprehensive to third party cover or vice versa, can I keep my no claims bonus?
In most cases, insurers usually apply any existing bonus to a new policy. Before you switch, the best approach is to check with your insurer.
Do young drivers qualify for No Claims Bonuses?
It depends on the insurer. In most instances, the driver will need to have had the policy for at least two years and not made a bonus reducing claim within those two years. We suggest asking your preferred car insurer if you're a young driver and asking them for their most up-to-date requirements.
No Claims Bonuses - Our Thoughts:
- No Claims Bonuses are less and less popular among car insurers, and those that offer them aren't overly explanative about how much they can save customers who qualify.
- When insurers give policy quotes, they ask about your claims history - someone without a claim for 5+ years is a lower risk than someone who has claimed 2+ times, and, for that reason, will be offered a cheaper policy price (all other things being equal).
- We believe a good starting point is to Compare Car Insurance to get the best price knowing that a No Claims Bonus, if offered, will take time to build up.
- No Claims Bonuses are only one contributor to the total cost of an insurance policy. You may have a flawless driving history, receive a no claims bonus, but still pay more each year for car insurance than what another insurer is offering.
