Let’s be honest, as much as we love our cars, the very main reason we buy a motor insurance policy is because it is mandatory in Singapore. (And we need a valid motor insurance policy in order to renew our road tax!)
Renewing a motor insurance policy is a yearly affair as long as you continue driving. Or if you are looking to purchase a new or second hand vehicle for the first time, getting a motor insurance policy is one of the processes you should get yourself familiar with.
Like all other types of insurance, understanding a motor insurance policy can be a lengthy and complex process. It is not just about the premium, but also the differences in coverage across all insurers, as well as the fine prints too. Comparing motor insurance policies is not as straightforward as simply getting the one with the cheapest premium. Furthermore, not all insurers provide their quotes online.
Do you know that when you make any modification to your vehicle, you have to inform your insurer?
Even if the modification does not require Land Transport Authority (LTA) approval, or has passed LTA requirements.
According to the General Insurance Association (GIA), “Modification refers to changes made to a car which are directly related to how it operates as a car. This includes changes to engine performance, drive train, air intake systems, exhaust systems, transmission systems, or any changes to the handling characteristics of the car including suspension systems, strut towerbars, or bracing as well as any changes made to the control unit of such parts. This list is not exhaustive.”
For cosmetics changes made to rims, tyres and body kits, please note that your insurer may only replace or repair suitable parts based on manufacturer’s standard specification, in the unfortunate event of an accident. Hence, it would be good to inform your insurer, and if any additional premium is required to cover these.
Types of motor insurance coverage
There are 4 types of coverage available - Comprehensive, Third Party Fire and Theft (TPFT) , Third Party Only (TPO) and Private Hire (PH).
TPO provides the most basic coverage out of the three. It only covers the driver’s legal liability for damages caused to a third party in an accident, such as bodily injuries, and damage to third party’s vehicles or property.
TPFT covers whatever TPO covers, but is extended to cover damages caused by fire and/or theft to your vehicle. Hence, the premium will be slightly higher than TPO.
Comprehensive plan is the priciest compared to TPO and TPFT as it covers all of the above, and includes coverage to the driver as well. Both bodily injury caused to the driver and damages to the vehicle are covered too. Besides fire and theft, a comprehensive plan also covers floods and other disasters. If your vehicle is still under loan, it is recommended to get a comprehensive coverage.
PH insurance plan is for private-hire drivers, such as Grab and Gojek drivers. Commercial vehicles or private vehicles are registered under the Z10 / Z11 classification, and all PH vehicles are required to get a PH insurance policy.
What are the factors that affect my motor insurance premium?
Other than the type of motor insurance coverage, many factors affect the computation of a motor insurance premium, and it is not just a matter of young versus old, new driver versus experienced driver, or male versus female.
The main factors that will affect your premium are summarized below.
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Factor
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Guideline
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Age
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Usually premium is the cheapest when you are between 30 to 60. However, if you are below 30, the younger you are, the more expensive the premium will be. And if you are too old, you may be charged with a higher premium too.
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Gender
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Females are charged with a lower premium compared to Males, as they are deemed to be more careful drivers.
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Marital Status
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Drivers who are married get lower premiums as they are deemed to be more responsible drivers.
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Driving Experience
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The longer you have been driving, the cheaper the premiums (and this is based on your driving license pass date)
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Occupation
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Outdoor or sales jobs reflect a higher usage of the vehicle compared to Indoors jobs. Hence a higher premium will be imposed due to the higher risk.
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Make and Model of Car
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Premiums are cheaper for basic cars (usually a basic Japanese car) compared to Continental cars, luxury cars and SUVs. Hence if you are a new driver driving a Porsche, be prepared to pay a much higher premium.
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No Claims Discount (NCD)
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For each year that you do not make any claims (excluding windscreen) against your policy, you earn 10% NCD. The most you can accumulate is 50% after 5 claim-free years.
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Claims History
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Any claims within the past 3 years will affect your premium. Some insurers decline to renew if you have more than 2 accidents in a year or if the total claim amount is too high.
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Age of Vehicle
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The older the vehicle, the cheaper the premium gets. But for renewed COE vehicles, premiums will start to increase.
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Usage of Vehicle
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The less you drive, the lower risk of accidents. Hence, off-peak cars usually have lower premiums.
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Certificate of Merit (COM)
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If you have not gotten any demerit points from the traffic police over the past 3 years, you can get an additional 5-10% discount (depending on insurer) after deducting the NCD. You can check for your eligibility here.
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Excess
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Excess is the amount you need to pay upfront for your own damages caused by an accident. You can increase your excess to lower your premium, but bear in mind this means you need to pay more when it comes to an accident claim for your own damage.
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Choice of Workshops
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Premium will be cheaper when you go for authorised workshops listed by the insurer. However, if you have your preferred workshop to go to in the event of an accident, or if your vehicle is under warranty and your dealer workshop is not in the list of authorised workshops, then you will be charged a higher premium. Good to take a look at the list of authorised workshops first before you purchase the motor insurance policy. Some insurers’ authorised workshops may have included your preferred workshop, or dealers’ workshops.
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Named Driver(s)
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You can add other drivers to the policy but this will cost more. Some insurers provide up to 2 free named drivers, some allow anyone within the chosen age range to drive. If there is someone else who drives the vehicle often, it is better to include him or them.
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There are also other add-on features like Personal Accident coverage, Tow services (in the event of a breakdown), NCD Protector benefit (to protect the 50% that you have finally accumulated over the years) or Loss of Car Use benefit that can be covered in your policy at an additional premium too.
The more you add on, the higher the premium will be, of course. Nonetheless, not all insurers provide the same add-on benefits. For example, instead of providing Loss of Car Use benefit, some insurers provide a daily cash benefit of varying amounts, and also depends on the minimum number of days your car is at the workshop before you are entitled to claim the cash benefit.
Besides looking at the premium and benefits, the claims support and process of the insurer could be factors that vehicle owners should consider too.
The above are just our humble opinions on what vehicle owners should look out for when purchasing a motor insurance policy. Before committing to any plan, please do your own research. (Do note that there are close to 20 general insurance companies in Singapore that provide motor insurance coverage!)
However, if you feel too overwhelmed by so many different motor insurance policies, and you would like to get a free and non-obligatory motor insurance quote, please APPLY HERE! We at Smart Towkay will compare the quotes for you and provide you with the best 3 quotes (and not just the cheapest quotes)!
For business owners who are looking at commercial motor insurance, the above content is applicable to your commercial vehicles too. Except for NCD, where the maximum is 20%, and yearly increment is 5%.
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