No-Claim Discount

The no-claim rating system consists of 20 levels, from level 1 to level 20. New policyholders start at level 6, and one claim-free year advances the rating by one level. Filing a claim drops the rating by 1 to 3 levels depending on the type of accident. The discount rate at level 20 (maximum) is approximately 63%, while the surcharge rate at level 1 (minimum) is approximately 64%. This means there is roughly a fourfold difference in premiums between levels 20 and 1.

A 2012 system reform introduced the "claims-history coefficient," creating premium differences at the same level based on claims history. For example, at level 10, a claim-free record yields a 45% discount, while a claims history yields only a 23% discount. The claims-history coefficient applies for 3 years after a 3-level-down accident and 1 year after a 1-level-down accident. Since a single accident affects premiums for up to 3 years under this system, filing claims for minor accidents should be carefully considered.

Whether to file a claim for a minor accident should be decided by comparing "the premium increase from filing" against "the cost of paying for repairs out of pocket." For example, filing a claim for a 100,000-yen repair might drop your rating by 3 levels, increasing premiums by a total of 150,000 yen over the following 3 years. In this case, paying for the repair out of pocket saves 50,000 yen.

Break-even calculations require simulating your current level, premium, and post-accident level and premiums over 3 years. Many insurers provide rating simulators on their websites or apps, so running a simulation at the time of an accident and making a numbers-based decision is advisable. As a general guideline, self-payment tends to be more advantageous when repair costs are under 200,000 yen. The long-term economic benefit of maintaining your no-claim discount is substantial, so avoid filing claims casually.