Vehicle owners in NSW know a no-claims discount (NCD) as the amount their car insurers will reduce in their premium for maintaining a claims-free record. You can accumulate your no-claims discount for every consecutive year you don’t raise an at-fault claim. Of course, the cumulative discount you can avail of is capped at a specific figure.
No-claims discounts can encourage car owners to have a clean driving record and hopefully lower their premiums during the renewal cycle. However, the cost of car insurance in NSW depends on several other risk factors an insurer considers apart from the no-claims discount. So, there is no way to tell clearly if your future cheap car insurance premiums will be affordable or not.
It is best to reach out to your insurer when you are unclear about the factors affecting your vehicle insurance premiums. In the meantime, learn about the validity of the no-claims discount in four cases we have dealt with below.
Case 1: What happens to my NCD if I cancel my vehicle insurance?
If you cancel your policy, most insurers agree you will have a year to purchase another policy to retain your NCD.
If you don’t renew your current policy or buy a new one from another insurer within twelve months, you will very likely lose your NCD. And, remember, once you lose your earlier NCD, you will start accumulating your NCD again from the beginning when you purchase a policy beyond the grace period.
You must know that your NCD will increase every consecutive year you don’t raise an at-fault claim, and you will usually hit the maximum NCD level in the 5th year.
However, if you cancel your policy mid-way through a year, that year probably wouldn’t qualify for NCD calculation.
At the same time, if you are already eligible for the maximum NCD, then midterm policy cancellation will probably not affect your NCD.
Case 2: What happens when there are lapses in my vehicle cover?
Talk to your insurer to understand what time gap is involved with retaining or losing your NCD. You must start building your NCD from scratch if you lose your earlier NCD, irrespective of the insurance provider with whom you had purchased the policy before the lapse in cover. So, learn what can happen to your NCD when considering switching insurers.
Case 3: Can listed drivers on my policy accumulate NCD?
Only the policy holder can build up a NCD. The other listed drivers who drive the car don’t contribute to the claims-free discount. In contrast, if any of the listed drivers are involved in an at-fault incident leading to a claim, then your (regular driver’s) NCD will very likely be reduced appropriately.
Case 4: Is NCD transferable from overseas?
This aspect can differ across vehicle insurers. Some insurers will allow you to transfer the NCD you have accumulated in various countries recognized by your vehicle insurer. You must provide your insurer with documentation supporting your claim of building up a NCD abroad. However, we still advise contacting your cheap car insurance provider to know more about this.
The cases mentioned above revolving around a NCD are important, and if you have other questions on your mind, don’t hesitate to talk to your vehicle insurer. If you are a person who is frequently relocating, then you must speak to your car insurance NSW provider, so you know the validity of your vehicle insurance when driving in foreign places.