The ins and outs of No Claims Discounts!
A No Claims Discount (NCD) is a discount applied to your car insurance premium because of good driving and good claims history.
Did you know the average Australian has a crash every 7 years? You might’ve been lucky and not had an incident in all that time, or you could be not-so-lucky and had a few! Either way, you’ve probably been cautious when claiming and tried to build up good discounts over the years.
Building up this discount is one of the best ways you can reduce your car insurance costs. The longer you drive without making a claim, the bigger your discount will get.
What if I switch car insurers? Can I keep my discount?
Many insurers will accept NCD’s you’ve had with your previous insurer, but you should always read their terms and conditions as limits may apply. They’ll also need you to provide proof in the form of a renewal notice from your previous insurer.
If I claim for a broken windscreen do I still lose my discount?
Not always, many insurers will not reduce your discount if your claim is to do with windows, or storm damage to your car.
I’ve been in an accident that wasn’t my fault, do I still lose my NCD?
Not always, many insurers will not reduce your discount if your claim is to do with a no fault accident with another vehicle.
What is Rating 1?
Rating 1 is the maximum discount you can achieve after 5 years of good driving.
How can I keep my Rating 1?
Once you’ve not claimed for 5 years and achieved a Rating 1, you can then retain this discount by getting NCD Protection. Protecting your No Claims Discount doesn’t come for free, you’ll have to pay for the privilege. But the risk of not protecting it (if you do have to make a claim) means you will lose some of your discount without it.
If you chose not to protect your NCD you won't lose the entire discount in the event of a claim. On average you would lose two years' discount for one claim.
What are the pros of NCD Protection?
- NCD protection can reduce your insurance premiums. Faced with high premium rises if you do make a claim without it, the cost of the additional protection might be a worthwhile investment.
What are the cons of NCD Protection?
- You have to pay extra for the protection (but it’s not too much)
- The longer you pay to protect your discount for, the less cost effective it becomes. Say you pay for the protection for 3 years in a row and don’t make a claim, then in the fourth year you do. Due to the average annual cost of protecting your No Claims Discount, you would actually be worse off compared to someone who didn't protect it at all.
Are there any circumstances when I can claim and it won’t affect my discount?
Many of the insurers we compare allow you to make one claim during your first year of insurance, or two claims in a three-year period without affecting your discount, only if you have purchased NCD Protection. For any further claims, your discount is likely be reduced on renewal. This will vary from insurer to insurer so it's vital to read the small print to understand your policy.
How is my discount affected if I need to make more claims?
If you do need to make more claims than your policy ‘allows’, your discount might be reduced on renewal by two years for each claim, and your cost of insurance may increase.
How can I find a policy that gives me the most money off?
Shopping around and comparing is the one of the best ways to find a policy that gives you the best bang for your buck. NCD’s are a great way to reduce your car insurance costs, but it’s not the be all and end all. There are other ways in which you can save. If you’re thinking of swapping providers, it’s a good idea to read their conditions on transferring discounts over (as well as all other policy info) before you buy.
Use our car insurance comparison to compare a range of products today and see if you can make savings on your car insurance.
Always read the small print
Every insurer is different – some may let you make multiple claims on a protected policy without affecting your premiums, but some may limit the amount of claims you can make. You should always read the small print before you buy to make sure you understand their benefits.
Need to claim? Read our 7 top tips to successful car insurance claims.