4 Questions Around No-Claims Discount Offered by Car Insurers in NSW

July 26, 2022 by No Comments

Insurers may offer a no-claims discount, also known as a claims-free discount, when a policyholder doesn’t have a record of claims in a particular number of years. Also, the no-claims discount on your car insurance policy (third party property damage, third party fire, and theft, or comprehensive car insurance) can increase with every successive year you don’t make an at-fault claim.

The more the number of consecutive years you maintain the claims-free status, the bigger your discount can get. Most insurers cap the claims-free discount at five years when you can receive the topmost rating and maximum discount. Also, if you purchase or renew car insurance online, you may be eligible for an additional discount for other reasons, like being the only driver of your vehicle or insuring more than one car with the same insurer.

How does my insurer compute the no-claims discount?

Your insurer can consider the number of years you have been driving your vehicle, your claims history that can include claims records of other listed drivers on your policy, and your no-claims rating from your previous vehicle insurer.

How do I find out my driver rating?

Checking your driver rating is pretty straightforward. All you need to do is log in to your online vehicle insurance account and check the details, refer to your insurance certificate, go through the latest renewal offer sent by your insurer, or just ring up your insurer to know your driver rating.

Will a no-claims discount assure me of reasonable premiums?

No, a no-claims discount is one factor that can affect your yearly premiums. An insurer can consider many other factors before coming up with the final quote. For instance, every insurer may assess a policy holder’s risk profile differently; they can consider your living situation, age, nominated drivers on your policy, etc.

Year on year, your vehicle insurance premium may increase before your no-claims discount is implemented. So, your insurance may still cost more than the year before but a no-claims discount can considerably lower the inflated premiums. It helps if you know the quote on your renewal notice can still be higher than the previous year’s quote.

Also, remember, even if you have paid for your vehicle’s loss or damage instead of claiming from your insurer to protect the no-claims discount, you may still have to deal with higher premiums later on. 

What happens to my no-claims discount when I make an at-fault claim?

In at-fault claims, your insurer may be unable to recover money either in part/whole from the other party, if involved. They may have to compensate for your vehicle’s loss/damage and/or take care of your legal liabilities (up to a specific limit) during an accident, theft, attempted theft, malicious act, or extreme weather events. 

Suppose the claims arise from accidents or theft/attempted theft activities; you may need to pay applicable excesses and face a reduction in no-claims discount. And, in the event of a claim arising from vehicle loss/damage due to extreme weather, you may still need to pay relevant excesses, but the claim might not affect your no-claims discount. It depends on your insurer.

Some insurers may add your current driver rating to your new insurance policy certificate. However, you can’t apply it to a policy purchased for another vehicle. Also, if you don’t drive for some years, you may quickly lose your accumulated no claims rating. 

Even when you can make use of a no-claims discount with various car insurance policies (provided you are eligible), comprehensive car insurance is the only policy that can cover your vehicle’s loss or damage for broader events. In contrast, third-party fire and theft can cover your vehicle for limited events like fire/theft/attempted theft. With car insurance online services comparing benefits, discounts, and requesting quotes can be hassle-free before you sign up for a policy. 


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