Car Insurance in Singapore, much like COE isn’t a choice. Like many other countries, car insurance is a necessity, should you choose to buy a car. Yet it can be rather confusing, with dealers throwing around terms like excess, co-insurance, and no claim bonus, so to help you understand car insurance a little bit better, we’ve compiled some information for the first time car buyer to understand the world of car insurance.

1.   Types of car insurance

There are basically three types of car insurance available locally: Third Party Insurance; Third Party, Fire, and Theft and Comprehensive Coverage.

Third party insurance covers the other party in an accident. Just to give you an example, if you’re involved in an accident where you’ve rear ended another vehicle, third party insurance will pay for the other vehicle’s damage but not yours.

Third Party, Fire, and Theft insurance covers you and the other party in an accident. Also, as the name implies, you’ll be covered against fire and theft. Which is to say, that in the unlikely event that someone decides to steal or set your car on fire in super safe Singapore, you’re covered.

Comprehensive coverage covers the most scenarios and is generally the choice of most Singaporeans, largely because it’s a condition of many car loans. Cover includes death for you and third party, accidents, fire, theft, medical costs in Singapore.

2.   How are the premiums calculated?

A multitude of factors influence the cost of premiums, which is calculated using the Risk Factor Rating System (RFRS). The factors include

The Driver

Driver Age – Younger drivers especially those between the ages of 18 -21 are normally charged the highest premiums, these decrease as the driver gets older, generally drivers between 31 – 65 have the lowest premiums. After 65, premiums begin to rise again as the risk increases with old age

Driver Experience – This factor is based on the number of years an individual has held his license, those who have just gotten their license will be charged the highest premiums, the longer you’ve had your license, the lower the premium, even if you haven’t been driving.

Driver Gender – Men are generally deemed to be more reckless on the road, while women in spite of what popular culture will tell you, are safer. As such, a man’s premiums are higher than that of a woman’s.

Driver Occupation – Drivers with jobs that require more time outdoors, like sales have to pay higher premiums for the distance they drive tend to be more than those who are deskbound.

The Car

OPC Cars – Off peak cars or those with red plates may get better insurance rates since they’re driven on the roads during non-peak periods

Engine Type and Capacity – Cars that have higher engine capacity or CC tend to get charged higher premiums, those with Turbo engines also tend to pay higher premiums than those who have normal engines.

Vehicle Age – The older the car, the lower the premium, enough said.

The No Claim/Safety Bonuses

No Claim Bonus/Discount (NCB/NCD) – A bonus/discount provided by the insurer every year. The longer you can go without a claim, the lower your premiums will get.

Safe Driver Discount – An additional discount on top of your NCB/NCD that rewards drivers who’ve had no demerit points deducted over the past two years.

3.   What is Excess/Deductible/Co-insurance?

The term excess, deductible and co-insurance are used interchangeably, though not an easy concept to understand, to put it in layman’s terms, this would be the amount that you would have to pay before your car insurance kicks in. Just to give you an example, if your excess is say $1,000 and you are involved in an accident where repairs are judged to be $3,000. You would have to pay for the first $1,000 while the insurance company would pay the remaining $2,000. The idea is that if drivers know that they’ll have to pay for any damage they incur on the road, they’ll drive safer.

For more information on owning a car in Singapore, explore these car articles.

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).