Cost & Savings
No Claims Bonus in NZ Car Insurance: How It Works and When You Can Lose It
When we help people compare car insurance in New Zealand, one of the most misunderstood features is the no claims bonus. Many drivers assume it works like a permanent reward for being careful, or that it automatically follows them forever regardless of what changes on their policy. In practice, it is usually more conditional than that.
A no claims bonus is generally a premium discount that builds up when you go for a period without making a claim. But the exact rules depend on the insurer, the type of claim, the evidence available after an accident, and whether the insurer still offers that discount structure to new customers. That means the right question is not just “Do I have a no claims bonus?” but also “What events reduce it, protect it, or make it irrelevant at renewal?”
If you are reviewing cover now, we recommend comparing the full policy terms alongside the price, not just the headline discount. Our car insurance comparison page is a good starting point for seeing how cover options differ, and it can also help to review related household protection needs such as home insurance or broader budget tradeoffs like credit cards and regular household bills through power comparison.
What a no claims bonus means in New Zealand
In NZ car insurance, a no claims bonus is usually a stepped discount on your premium for claim-free driving history. Consumer NZ notes that some policies still offer stepped no-claims discounts, and that after five claim-free years the maximum discount can reach about 60% to 65%, depending on the insurer and product design. Consumer NZ also points out that these discounts do not always disappear after every claim, because some insurers will not reduce the discount where the driver was not responsible and can provide the other party’s registration and contact details.
In our experience, this is where confusion starts. Drivers often hear “up to 65% discount” and assume that means they are paying 65% less than everyone else. In reality, the insurer first prices your base risk using factors such as age, vehicle type, address, theft exposure, repair costs, and recent claims history. The no claims bonus is then just one rating factor layered on top of that. So even a strong bonus does not guarantee a low premium.
How insurers usually calculate it
Most insurers that still use a no claims bonus structure apply it by policy year. If you complete the policy year without a qualifying claim, your rating may step up at renewal. If you make a claim, your rating may step down, stay unchanged, or be protected, depending on the policy wording.
For example, Tower’s policy wording says you receive a no claims bonus if you have not had any claim with Tower or your previous insurer during the last insurance policy year. It also says the bonus may step down on renewal after a claim and may step back up at a later renewal if you make no further claims. MAS describes a different approach, including a secured no claims bonus after five consecutive claim-free years on its policy.
That variation is why our team always recommends reading the insurer’s current policy wording rather than relying on older assumptions or a friend’s experience from another brand.
| Issue | What usually happens | Why it matters |
|---|---|---|
| Claim-free year | Your discount may increase at renewal | Stepped bonuses usually build over time, not all at once |
| At-fault claim | Your bonus may reduce or reset | You can face both a higher renewal premium and loss of discount |
| Not-at-fault claim with clear evidence | You may keep your bonus and avoid excess | Driver details and proof of fault are often critical |
| Insurer pricing changes | Your premium may still rise | A preserved bonus does not freeze your premium |
| Changing insurer or policy setup | Treatment varies by insurer | Do not assume an old benefit transfers automatically |
When you can lose your no claims bonus
The most common way to lose part of a no claims bonus is to make an at-fault claim. Depending on the insurer, this may mean a step-down rather than a total reset, but the result is usually the same in practical terms: your renewal price can jump noticeably.
We also see people caught out by less obvious triggers:
Insufficient evidence after a not-at-fault accident. If you cannot identify the other driver or prove they were at fault, the insurer may treat the claim in a way that affects your bonus. ICNZ says uninsured motorist or innocent party protection typically depends on the other driver being identified and acknowledging involvement.
Assuming every claim is bonus-neutral. Small claims, at-fault claims, and repeated claims can affect rating even if the incident seems minor.
Changing vehicles or policies incorrectly. Consumer NZ reported a case where a customer lost an old AA no-claims entitlement after selling one car and buying another because the benefit was not transferred in the way the insurer required. We take this as a reminder to confirm how any legacy discount carries over before replacing a vehicle.
Relying on outdated product rules. Some insurers that historically promoted no claims discounts have changed their approach for new customers, so a policy benefit you had years ago may not exist in the same form today.
When you may keep it after a claim
Not every claim automatically damages your no claims position. Consumer NZ says most providers will usually not penalise you when you are not responsible for the crash and can supply the other driver’s registration and contact details. ICNZ similarly says many NZ motor insurers include an uninsured motorist or innocent party extension that can waive excess and maintain the no claims discount when an identifiable uninsured driver causes the damage and acknowledges involvement.
Specific policy wordings can go further. Tower’s comprehensive policy says you keep your no claims bonus and do not pay an excess for an accident where you identify the at-fault party and Tower is satisfied the other party was more than 50% at fault. Tower also states that comprehensive customers with a full no claims bonus for at least two years may keep their current bonus after one at-fault claim within a two-year period under its bonus protection wording.
In practical terms, when we review claims scenarios, the key actions are simple: collect the other driver’s name, phone number, address if possible, registration number, vehicle details, photos, and witness information. The more clearly fault can be established, the better your chances of preserving both your excess position and your no claims status.
Why your premium can still rise even if you keep your bonus
This is the part many drivers find frustrating. Keeping a no claims bonus does not mean your premium stays flat.
Tower’s policy wording expressly says other rating factors may mean that although you receive a no claims bonus, your premium may still increase. MAS also explains that premiums reflect wider risk and cost drivers, including claims frequency, operating costs, taxes and levies, and broader repair-cost pressures. Consumer NZ likewise encourages shoppers to compare widely because premiums and policy benefits can vary significantly between insurers.
In our experience, premium increases often come from factors outside your personal claim history, including:
rising repair costs and parts prices
vehicle theft trends for certain makes and models
postcode or suburb-level risk changes
changes in reinsurance and weather-related claims costs
insurer-wide repricing of a customer segment
So if your renewal rises after a claim-free year, that does not automatically mean your no claims bonus was removed.
Market changes in NZ: why the old no-claims assumptions no longer hold
One major change in the NZ market is that no claims bonuses are less universal than they used to be. Consumer NZ reported in 2025 that AA Insurance no longer offered new customers a no claims bonus for comprehensive car policies, while AMI and State had also stopped offering no claims bonuses on new car insurance policies. Consumer NZ also reported that Tower and Trade Me Insurance had removed no-claims discounts for new customers, while MAS still offered both no-claims and multi-policy discounts at that time.
From our perspective, this matters because many drivers still compare policies as if every insurer has the same discount ladder. They do not. Increasingly, insurers appear to price risk more directly rather than marketing a large visible no claims discount. Community discussion on Reddit reflects that shift as well: some commenters with insurance experience describe no-claims discounts as more of a pricing mechanism than a pure reward system. We would not treat those comments as authoritative evidence, but they are useful as a signal that many consumers are noticing insurers move away from older discount models.
Practical questions we think drivers should ask before relying on a no claims bonus
When our team reviews a car policy, we suggest checking these points before you assume your discount is valuable:
Does the insurer still offer a no claims bonus on new policies? If not, compare the whole premium and cover package instead of focusing on a feature that may no longer apply.
How is the bonus earned? Check whether it is based on one claim-free year, multiple years, or a separate protected status after a longer period.
What claims do not affect it? Windscreen claims, not-at-fault accidents, and uninsured-driver incidents may be treated differently.
What proof is required? Some protections only apply if you can identify the other party and the insurer is satisfied about fault.
Does it transfer if you change cars or amend the policy? Never assume. Confirm it in writing if the benefit matters to you.
What happens after multiple claims? Even if the bonus is not fully removed, your risk rating may still change.
Practical takeaway
Our practical view is straightforward: treat the no claims bonus as a useful pricing feature, not as the foundation of your car insurance decision.
When we compare policies, we usually put the following ahead of the headline bonus:
the actual annual premium
excess structure
agreed value versus market value
repairer options
treatment of not-at-fault claims
uninsured driver protection
clear exclusions and disclosure requirements
If two policies are otherwise close, then the no claims rules can be the tie-breaker. But we would not pay materially more for a policy just because it advertises a discount ladder. What matters is the total cost, the claims experience, and how the insurer treats real-world scenarios after an accident.
If you are weighing up your options, start with a fresh comparison rather than assuming your renewal is still competitive. You can also review related protection needs at the same time, such as health insurance or travel insurance, especially if you want a clearer view of your total household risk and insurance spend.
References
- Consumer NZ: Car insurance buying guide
- Consumer NZ: customer had no claims discount reinstated
- Insurance Council of New Zealand: Motor insurance guidance
- Consumer Protection NZ: Car insurance
- MAS: Motor vehicle insurance policy details
- MAS: Understanding your insurance premium
- Tower: Comprehensive car insurance policy wording
- Tower: Third party car insurance policy wording
Author / Editorial Team
This article was produced by our internal Insurspy editorial and research team. We work on insurance comparison content, policy feature analysis, and consumer decision-support content for the New Zealand market. In preparing articles like this, we review live insurer policy wording, consumer guidance, regulator and industry body resources, and public discussion trends to identify where everyday policyholders are most likely to misunderstand exclusions, discounts, and claims outcomes. Our goal is to turn that research into practical guidance that helps readers compare cover more confidently and avoid costly assumptions.