What Is A “No Claim Bonus” In Car Insurance?

Jan 14, 2022
Car Insurance
By Staff writer

If you're a good driver, you may just be the right match for a no claim bonus on your car insurance policy. Under this benefit, drivers who are deemed to be of ‘lower risk’ may receive some reward from their insurer. Typically, this depends on how long you have kept your policy without making a claim over a specific amount of time.

Of course, some insurers might offer a few exceptions, such as a chipped windshield or a broken mirror, while still allowing the policyholder to keep this bonus.

How exactly does a No Claim Bonus work?

For every year that you don’t make a claim on your car insurance, your discount increases. This is usually measured via ratings, with Rating 1 being the maximum possible discount available. This is usually achieved when you don’t make a claim for five years. 

This bonus is reduced when you make a claim. Of course, for some providers, your bonus may remain intact when you make a claim for something that you were not at fault for. So you can still make weather-related or accident-related claims provided another driver was at fault. 

These details will vary depending on your chosen insurer, so it’s still a good idea to shop around to find the best deal.

Is it worth keeping a No Claim Bonus?

It depends. A No Claim Bonus is typically an extra-cost option that you can add to the cover, though your insurer may also offer this after having gotten a policy without making a claim with them for some time. Of course, there are other factors you need to consider:

  • No Claim Bonuses only protects the discounts you’ll receive; your premiums will still increase after making a claim.
  • You may find your car insurance becoming a bit pricier as you are technically paying an additional amount in order to keep a discount.
  • You’ll need to stay with a specific provider for a while, so you may not be able to switch to a more competitive provider right away.
  • Your bonus is rarely transferred, which makes it complicated once you find a more competitive insurance provider.

Depending on how much you’re paying for insurance with the bonus added, it may be more cost-efficient to switch to a more competitive provider with better coverage options.

Read: The Ultimate Guide To Mechanical Breakdown Insurance in New Zealand (MBI)

Car Insurance Providers that offer No Claim Bonuses

MAS Car Insurance

MAS offers a Secured No Claim Bonus, which will then ensure that this is protected for the life of the policy, regardless of the number of claims you make in the year. To qualify for this benefit, you’ll need to stay with the insurer for five years without making a claim (excluding glass claims). 

Tower Car Insurance

Tower states that they will adjust the premiums for customers who qualify for their No Claim Bonus. They will also allow you to keep your bonus discounts if you’ve been involved in an accident during the insurance period, provided you're not at fault and are able to prove who is at fault.

Read: The Most Reliable Cars Of 2021

AMI Car Insurance

AMI offers a No Claim Bonus via their freeBmax program. This allows you to keep your maximum bonus while making up to two claims that would have reduced the discount in any 12-month figure. It doesn’t cost any extra premiums for qualified policies. Another added benefit is that you can apply it to more than one vehicle, provided that the additional policies qualify for freeBmax.

In order to qualify for their freeBmax policy, you must meet AMI’s conditions:

  • Take out an AMI Private Vehicle policy (Comprehensive, Third Party with Fire & Theft, or Third Party only) or an AMI Vintage & Classic Car policy
  • Have received AMI’s maximum No Claims Bonus discount continuously for the last 12 months.
  • Not had a bonus reducing claim in that 12-month period.

Once you are able to fulfil all those conditions, your policy will now be qualified for a freeBmax benefit.


TradeMe Car Insurance

TradeMe’s No Claim Bonus is more progressive. You first go for a year without making a claim in order to be eligible for the bonus. This discount will then increase for every year that you go without making a claim, until you reach the highest available discount.

In the event that you do make a claim, you only go back down one step, so you may still be able to retain a discount the next time you make a claim.

The bonus is reinstated for another year without a claim where you paid an excess.

They also offer No Claims Bonus Protection, which now protects the discount you will receive from your original bonus program. However, this is only applicable for people who have comprehensive car insurance policies.

Read: Top 5 Car Insurance Providers In Auckland

Is it possible to lose my No Claim Bonus?

Yes. You will lose the bonus or have it reduced after you make a claim on your policy. You may also lose the bonus if you add another principal driver to your policy if they are not qualified for the discount. Lastly, you will lose it when you don’t renew your policy and require a new one to be written when you repurchase.

Read: Electric Vehicles NZ: How To Get EV Insurance And Assistance

Compare Car Insurance First!

While receiving a discount for your good driving habits can be a big boon for your car insurance policy, you may eventually find it hard to get competitive options since you’ll need to hold on to a policy for much longer first before you can qualify and see how much savings this can get you. Not to mention that it may be possible to get the maximum discount available as a result of good driving but still pay more in car insurance compared to a more competitive, lower-cost option.

Compare your car insurance options first. glimp has taken the time to gather the best car insurance deals in NZ, saving you time and effort in sorting out all these policies. See which provider is the best to switch to and get bigger savings, all while retaining a good level of coverage.

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