Your no claims bonus is one of the biggest levers you have for bringing down your car insurance premium. Here's how it works in NZ, how much it can save you, and what to do to keep it intact.
A no claims bonus (NCB) - sometimes called a no claims discount or claims-free discount - is a reward your insurer gives you for not making any claims on your policy. The longer you go without claiming, the bigger the discount on your premium. It's pretty straightforward: don't claim, pay less.
In New Zealand, most major car insurers offer some form of NCB. The way it works is that each year you hold a policy without making an at-fault claim, you move up a level on the insurer's NCB scale. After several claim-free years, you can reach the maximum discount - and the savings are genuinely significant.
The NCB system exists because insurers see claim-free drivers as lower risk. If you haven't made a claim in five or six years, statistically you're less likely to make one next year. That lower risk translates directly into a lower premium for you.
It's worth knowing that the NCB applies to at-fault claims specifically. If another driver crashes into you and their insurer picks up the bill, your NCB typically stays untouched. The same usually applies if a claim is made under the windscreen-only section of your policy, though this varies between insurers.
Every NZ insurer structures their NCB slightly differently. Tower, AMI, and AA Insurance all use their own scales and terminology. Some call it a "no claims bonus," others call it a "claims-free rating" or "claims-free discount." The underlying principle is the same across the board.
The short answer: a lot. A maximum no claims bonus in New Zealand can reduce your car insurance premium by up to 65% with some insurers. That's a massive chunk of your annual cost disappearing purely because you've kept your record clean.
The discount builds up gradually. In your first claim-free year, you might get a 10-15% discount. After two years, that could rise to around 25-30%. By the time you reach five or six consecutive claim-free years, most NZ insurers will have you at or near the maximum discount tier.
To put that in dollar terms: if your base premium (before any NCB) would be $1,800 per year, a maximum NCB of 60% brings that down to $720. That's $1,080 back in your pocket every single year. Over a decade at maximum NCB, you'd save more than $10,000 compared to paying the full base premium.
The exact percentages and number of tiers differ between insurers. Some use a five-year scale, others go up to six or even seven years. Canstar NZ regularly publishes comparisons of car insurance features including NCB structures, which is useful for seeing how different insurers stack up.
The Insurance Council of New Zealand (ICNZ) notes that the claims-free discount is one of the most significant factors affecting what Kiwi drivers pay for their car insurance. It's the reward for being a careful driver - and it compounds year after year.
How your discount typically builds in NZ
This is the part nobody wants to think about - but it's important. When you make an at-fault claim, your no claims bonus takes a hit. How big a hit depends on your insurer's specific policy, but in most cases you'll drop back several levels on the NCB scale.
A common structure in NZ is that one at-fault claim knocks you back by two or three levels. So if you're sitting at maximum NCB (say, level 6 after six claim-free years), one claim might drop you back to level 3 or level 4. That means your premium jumps up significantly at your next renewal - and it takes years to climb back to where you were.
Some insurers are harsher than others. A few will knock you all the way back to zero after a single claim, wiping out years of carefully built-up discount. Others have a more graduated approach. It's worth checking your insurer's specific NCB scale so you know exactly where you'd land if you needed to claim.
Multiple claims in a short period can be particularly painful. Two at-fault claims within a year could see you dropped to the bottom of the scale, and some insurers may even decline to renew your policy if your claims history is looking risky.
Here's something worth considering: for minor damage, it sometimes makes financial sense to pay for repairs yourself rather than claiming on your insurance. If fixing a small dent costs $500 but making a claim would cost you thousands in lost NCB discount over the following years, paying out of pocket could be the smarter move. The Sorted.org.nz car insurance guide has some good thinking on when to claim and when to self-fund repairs.
Remember that not all claims affect your NCB equally. Non-fault claims (where the other party is responsible and their insurer pays) generally don't touch your bonus. Windscreen-only claims are also often exempt, though policies differ on this point.
Most NZ car insurers offer an optional extra called NCB protection (or claims-free protection). For an additional fee on top of your premium, this feature lets you make one at-fault claim per year - or sometimes one per period - without losing your no claims bonus.
The cost of NCB protection varies, but it's typically somewhere between $50 and $150 per year depending on the insurer and your current NCB level. Some insurers only offer it to drivers who have already reached the maximum or near-maximum NCB level.
Tower and AMI both offer forms of NCB protection on their comprehensive car insurance policies. The exact terms differ, so it's worth reading the fine print on what's covered and what the limitations are.
Is it worth it? That depends on your situation. If you've spent five or six years building up a maximum NCB and the discount is saving you $1,000+ per year, paying $100 to protect that discount can look like a very sensible investment. On the other hand, if you're only a couple of years into building your NCB and the discount is still relatively modest, the maths might not add up.
One thing to watch out for: NCB protection doesn't mean you can claim without consequence forever. Most policies limit it to one protected claim per year or per policy period. If you make a second at-fault claim in the same period, your NCB drops as normal. It's a safety net for the occasional mishap, not a free pass.
The Consumer NZ car insurance guide notes that NCB protection can be good value for drivers with a high discount level, but less worthwhile for those still building their bonus.
What happens after an at-fault claim - with and without NCB protection
Good news for anyone thinking about switching insurers: your no claims bonus is portable in New Zealand. You're not locked into staying with one insurer just because you've built up a healthy NCB with them. You can take it with you.
When you switch to a new insurer, they'll typically ask for proof of your claims history. This is usually a letter or certificate from your current (or previous) insurer confirming how many consecutive claim-free years you have. Most insurers can provide this on request, and many new insurers will contact your old one directly to verify your claims record.
There are a few things to be aware of. First, the NCB scales aren't identical between insurers. If your current insurer has a six-tier scale and your new insurer has a five-tier scale, your bonus might map slightly differently. You won't lose out dramatically, but the percentages might shift a little.
Second, there's usually a time limit on transferring your NCB. If you've had a gap in cover - say you went without car insurance for a year or more - your new insurer may not honour your previous claims-free history. The typical window is 12 to 24 months. If your cover has lapsed for longer than that, you may need to start building your NCB from scratch.
Third, some insurers may not recognise NCB earned with every provider. This isn't common in NZ, but it's worth confirming with your new insurer before you switch. A quick phone call can save you an unpleasant surprise.
If you're moving to New Zealand from overseas, some NZ insurers will recognise claims-free history from international insurers - particularly from Australia and the UK. You'll need documentation from your overseas insurer, and the new insurer may apply their own criteria for how much of that history they'll credit. AA Insurance is one insurer that has processes for assessing overseas claims histories.
One question that comes up a lot is whether your NCB applies if someone else is driving your car. The answer depends on how your policy is set up and who the NCB actually belongs to.
In New Zealand, the NCB is generally attached to the policyholder - the person who holds and pays for the insurance. If your partner drives your car and has an at-fault accident, it's your NCB that takes the hit because it's your policy. Named drivers on your policy don't build up their own separate NCB through your cover.
This can be a problem for younger or newer drivers who have been driving on someone else's policy for years. When they go to get their own car insurance, they start with zero NCB because they haven't been the policyholder themselves. Some NZ insurers do offer a small introductory discount for drivers who can prove they've been a named driver on another policy without claims, but this isn't universal.
If you own multiple vehicles, the NCB situation gets a bit more nuanced. Each policy has its own separate NCB. So you might have maximum NCB on your everyday car but a lower NCB on a second vehicle you insured more recently. A claim on one vehicle's policy doesn't automatically affect the NCB on your other vehicle's policy - they're tracked independently.
Couples and families sometimes try to structure their policies to protect their NCB by putting different vehicles under different names. This can work, but only if it's done honestly. The named policyholder needs to be a genuine primary user of that vehicle. Insurers can decline claims if they find the policyholder was nominated purely to take advantage of a better NCB.
If you're a young driver looking to build your NCB, the best approach is to get your own policy as soon as possible - even if the premiums are higher initially. Every claim-free year on your own policy is building an asset that will save you thousands over your driving lifetime.
Building a solid NCB takes patience, but the payoff is worth it. There are practical steps you can take to give yourself the best chance of keeping your claims record spotless year after year.
The obvious starting point is driving carefully. That sounds simplistic, but the data backs it up - most at-fault claims come from everyday situations like reversing into posts, misjudging gaps in car parks, and low-speed collisions at intersections. Staying alert in these mundane moments is where your NCB is really won or lost.
Choosing a higher voluntary excess is another strategy. By taking on a higher excess, you're signalling to yourself that you'll only claim for significant incidents. A $750 or $1,000 excess means you're unlikely to bother claiming for minor scrapes - and those are exactly the claims that eat into your NCB for relatively small payouts.
Where you park matters too. Garaging your car overnight rather than leaving it on the street reduces the risk of theft, vandalism, and hit-and-run damage. Some insurers will give you a lower premium for garaging - and fewer incidents means fewer claims, which protects your NCB.
If you do have minor damage, get a repair quote before rushing to make a claim. Compare the repair cost against the potential loss of NCB discount over the next few years. Often, self-funding a small repair is cheaper in the long run. The Sorted.org.nz insurance section has useful tools for thinking through these kinds of decisions.
Finally, once you've reached maximum NCB, seriously consider paying for NCB protection. At that point you've invested years in building your discount, and a single accident could cost you far more in increased premiums than the protection fee.
A practical roadmap to maximising your NCB
Start building your NCB as early as possible. Every year on your own policy counts. If you're a young driver, the sooner you start the sooner you'll reach maximum discount.
Most at-fault claims come from low-speed incidents - car parks, reversing, and intersections. Stay focused in these mundane moments to keep your record clean.
A higher excess discourages small claims that would chip away at your NCB. Only claim for incidents where the cost clearly exceeds your excess and the long-term NCB impact.
Before claiming, compare the repair cost against the premium increase you'd face from losing NCB levels. For small dents and scratches, paying out of pocket often works out cheaper over time.
Parking off-street or in a garage reduces your exposure to theft, vandalism, and weather damage. Fewer incidents means fewer claims and a healthier NCB.
Once you've reached maximum NCB, consider paying for claims-free protection. A small annual fee can safeguard years of built-up discount against a single unexpected claim.
The no claims bonus isn't exclusive to car insurance. The same concept applies across several other types of insurance in New Zealand, though the details vary by product and insurer.
Motorcycle insurance works very similarly to car insurance when it comes to NCB. Riders build up a claims-free discount year by year, and an at-fault claim drops them back down the scale. If you hold both car and motorcycle insurance, each policy has its own separate NCB - a claim on one doesn't affect the other.
Home and contents insurance also commonly features an NCB component. The structure tends to be simpler than car insurance - often fewer tiers - but the principle is the same. Going years without a claim on your house or contents policy earns you a discount. Weather-related claims (which are common in NZ given our climate) will affect your home insurance NCB just like an at-fault accident affects your car insurance NCB.
It's worth noting that NCB doesn't transfer between different types of insurance. Your five years of claims-free car insurance won't earn you a better NCB on a new home insurance policy. Each product line has its own separate claims history.
Some NZ insurers offer multi-policy discounts on top of your NCB when you hold multiple products with them. So having your car, home, and contents insurance with the same provider could give you both the NCB discount on each policy plus an additional multi-policy saving. Canstar NZ compares home and contents insurance features that can help you see which insurers offer the best combined value.
Travel insurance, health insurance, and life insurance generally don't use an NCB system. These products are priced on different risk factors, so the claims-free discount model doesn't apply in the same way.
See estimated premiums from NZ car insurers side by side.
Get Car Insurance Estimates