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Understanding what is a no claim bonus and how quickly it disappears helps you decide whether small claims are worth filing or if you should pay out of pocket to preserve your discount. If you understand what is a no claim bonus and how it builds, you can plan your insurance strategy more effectively. When you build up a strong no claim bonus rating, you offset higher-risk factors that might otherwise increase your premium.
Each insurance company uses different risk models and cost structures that produce varying base premiums. Calculate whether paying small repair bills yourself saves more money than claiming and losing two rating levels. Most insurers sell rating protection as an optional extra that costs around $50 to $150 annually. This two-level penalty applies regardless of claim size, so claiming $500 in damage costs you the same rating reduction as claiming $5,000. Making an at-fault claim drops your rating by two levels, which directly increases your premium at renewal. Understand how your insurance excess works and when you need to pay it.
The no claim bonus and the way insurers apply it can differ. For example, 'Rating 1' drivers haven't made a claim for the last five years (this is usually the maximum number). Generally, ratings start at 6 and reduce by one for each year you don't claim. The discount increases each year if you don't claim, up to a maximum number of years. A no claim bonus (also called a no claims discount, safe driver reward, no claim bonus rating scheme, or rating level) typically gives you a discount on your car insurance. For a fairer comparison, you might want to factor this into the prices when you're comparing car insurance quotes.
It works differently depending on the insurer, but generally it will let you make up to two claims without losing your no claim bonus. One of the big questions to ask yourself before taking out car insurance is whether you even want to bother with the no claim bonus. When you switch car insurance, it's also worth looking at whether your new insurer will recognise your no claim bonus. 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. Providers may also offer no claim discount protection which let you make a specific number of at fault claims without it impacting your rating.
If the outcome isn't in your favour, it may be time to explore other options. If you disagree with a premium increase, you can lodge a dispute with your insurer. Every insurance company uses its own methods to calculate premiums, so your experience may vary. It’s not uncommon for drivers to assume their NCB is protected only to find out it was impacted by a single claim.
They would only offer $21k which I could not buy the same vehicle/spec/condition for. I did think about switching to RACWA so I got a quote and while the premium was slightly cheaper but so was the cover. I called them and they could only say that the renewal was generated from the old system and the new policy was from the new system and the coverage was the same. They've been the cheapest insurer for my Model Y for the last couple of years (any Tesla owner can tell you how painful insurance can be), although I'm likely to move to Allianz later this year. For my current car, and previous car, they were the cheapest, for the car before that they were second cheapest.
Request quotes from at least three insurers when your policy renews to ensure your rating 6 discount works hardest for your wallet. Always compare final quoted prices across multiple insurers rather than focusing only on your rating discount. Some insurers specialise in certain demographics or vehicle types, letting them offer lower base rates for specific customer profiles. One insurer might charge a $2,000 base premium and offer you 60% off, while another charges a $1,400 base premium with the same discount. Your maximum discount applies to your insurer’s base premium, which varies significantly between companies. Reaching rating 6 doesn’t automatically give you the cheapest available premium in the market. Protection cover works best when you’ve reached rating 5 or 6 and want insurance against accidentally damaging your vehicle yourself, such as reversing into a post or scraping a gatepost.
You can safeguard your accumulated discount through strategic claim decisions and by purchasing no claim bonus protection cover as a policy add-on. Most insurers don’t penalise your rating for not-at-fault claims where another driver caused the accident and their insurer accepts liability. Your rating transfers between insurers when you switch policies, so you never lose your accumulated discount by changing providers.
In these cases, your own insurance policy may be triggered, and your premium may increase as a result. Plus, with Sheen, you're entitled to an accident replacement vehicle if you're not at fault, ensuring you stay on the road through it all. That said, if your insurer does become involved in the process, there’s a possibility they may take the claim into account when reviewing your policy renewal. In most cases, a not-at-fault accident does not impact your insurance premium, excess, or overall policy. We've created this guide to help you understand how your insurance policy may be affected by a not at fault accident. This is often used by drivers with a high rating. This can let you make one at-fault claim in a policy period without dropping back, subject to the product rules.