NCD or No Claim Discount (also known as No Claim Bonus or NCB) is easy to understand.  Basically, if you don’t make a car insurance claim while insured then each year you don’t make a claim your rating will improve until you have the highest rating possible as allowed by your car insurance company.

Insurance companies reward good drivers and do so by providing a discount if the person has not made a claim.   Ratings go from 1-6 with 1 bring the best and 6 meaning you have no no rating.  You can save up to 65% on your premium if you are a rating driver so it is well worth being a good driver as you end up geting cheaper car insurance.

None = 0% (sometimes called Rating 6)

Rating 5 (1 years) = 20-25%

Rating 4 (2 years) = 30-35% NCD

Rating 3 (3 years) = 40-45% NCD

Rating 2 (4 years) = 50-55% NCD

Rating 1 (5 years) = 60-65% NCD

Once you make a claim you can wipe several years off your NCB which means you will pay more for your insurance.  For this reason you should think carefully before making a small claim as it may end up costing you more in the long run.  For instance, if you do $700 dollars damage to your car and it was your fault you can go to your insurance company to get it fixed.  The basic excess is usually around $500 so that means you are getting your insurance company to do $200 worth of work on your car.  But now your insurance company knows you have mad a claim and will penalise you for that claim meaning you will pay more for your insurance and your rating will come donw.

Some insurers won’t drop you off rating 1 automatically if you have held it for a certain period of time or you have insured your NCB which is an optional extra among most auto insurance companies.  Some insurers even have rating 1 for life which means no matter how many times you claim your car insurance rating will always be 1 and your NCD will be the maximum offered by that company (usually 65%0).

Insurance companies may differ in how they assess NBC so QuoteMyWheels recommends you read the PDS before you purchase your car insurance.