How Does a No Claim Bonus Work in Australia?
In a Nutshell: A No Claim Bonus (NCB) is a discount on your premium for each year you go without making an at-fault claim. You can earn up to 50–60% off after 5+ years claim-free. One at-fault claim can reset your bonus to zero — but NCB protection (an optional extra) can save you from this.
How NCB Builds
| Years Claim-Free | Typical NCB Discount | Effective Premium (Base $1,000) |
|---|---|---|
| 0 (new policy) | 0% | $1,000 |
| 1 year | 10–15% off | $850–$900 |
| 2 years | 20–30% off | $700–$800 |
| 3 years | 30–40% off | $600–$700 |
| 4 years | 40–50% off | $500–$600 |
| 5+ years (max) | 50–60% off | $400–$500 |
💡 Note: NCB discount percentages vary slightly between insurers. NRMA offers up to 60%, Budget Direct up to 55%, AAMI up to 50%.
What Breaks Your NCB?
| Event | Does It Break NCB? |
|---|---|
| At-fault claim (you caused the accident) | ✅ Yes — resets to zero |
| Not-at-fault claim | ❌ No — NCB protected |
| Hit and run (not your fault) | ❌ No — if proven not at fault |
| Theft of your car | ⚠️ Some insurers treat this as a claim that affects NCB |
| Fire damage | ⚠️ Usually doesn't affect NCB |
| Windscreen claim | ⚠️ Some policies don't affect NCB |
| Speeding fine (no accident) | ❌ No — not a claim |
| Making a claim but withdrawing it | ❌ No — if no payment was made |
NCB Protection — What Is It?
| Feature | Without Protection | With Protection |
|---|---|---|
| Cost | $0 (included) | $30–$80/year extra |
| First at-fault claim | NCB resets to 0% | ✅ NCB protected — stays at current level |
| Second at-fault claim | Already at 0% | NCB may be reduced or reset |
| 3+ claims | Already at 0% | NCB resets |
| Is it worth it? | If you never claim, no | If you have 5+ years NCB — YES |
Example: You have 5 years NCB (60% discount on $1,200 premium = $480). You have an at-fault claim:
- Without protection: Premium goes back to $1,200 — $720 increase
- With protection ($50/year): Premium stays at $480 — $50/year well spent
Does NCB Transfer Between Insurers?
| Scenario | NCB Transfers? |
|---|---|
| Switching insurers | ✅ Yes — you can transfer your NCB |
| Adding a named driver | ✅ The named driver builds their own NCB (on some policies) |
| Moving from a parent's policy | ⚠️ Some insurers allow NCB transfer — ask before leaving |
| Moving interstate | ✅ Yes — NCB is recognised nationally |
| Overseas NCB | ⚠️ Some Australian insurers accept it — provide a letter from your previous insurer |
| Lapsed policy (no insurance for 6+ months) | ⚠️ Some insurers reduce or reset NCB |
How to Prove Your NCB
| Method | Details |
|---|---|
| Renewal notice from current insurer | Most common — shows your NCB rating |
| Letter from previous insurer | Required when switching insurers |
| Insurer's records | If you've been with the same insurer, they already know |
| Policy schedule | Shows your current NCB percentage |
| Online portal | Most insurers show your NCB in your account |
💡 Tip: When switching insurers, provide your NCB details during the quote process. If you don't, they'll start you at 0%.
Key Takeaway
- NCB = discount for each year without an at-fault claim.
- Maximum discount: 50–60% after 5+ years claim-free.
- One at-fault claim resets your NCB to zero — losing hundreds in discounts.
- NCB protection ($30–$80/year) is worth it for drivers with 5+ years NCB.
- NCB transfers between insurers (make sure to provide proof).
- Not-at-fault claims don't affect your NCB (in most cases).
- Windscreen and some other claims don't always affect NCB — check your PDS.
- Building NCB from day one is the cheapest path to lower premiums.
Last updated: July 2026
Disclaimer: This article provides general information about no-claim bonuses in Australian car insurance. NCB percentages, transfer rules, and protection options vary by insurer. Always check your PDS.