Car insurance is essential if you own a car and it is compulsory to have in order to drive a vehicle on the roads in Singapore. Should you not have insurance and embark on your journey on the roads, you could be fined up to $1,000, incarcerated up to 3 months, or both. Furthermore, you could have your driving license revoked for up to 12 months.
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Other than the penalties mentioned, getting into any car accident is undesirable as it causes a large dent in your pocket coupled with the many procedures that follow. Having insurance that covers you sufficiently is important when it comes to protecting your vehicle and yourself.
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There are 3 main types of insurance in Singapore including Comprehensive Car Insurance, Third Party Only (TPO) car insurance and Third Party, Fire and Theft (TPFT) car insurance. Before knowing how car insurance works, we will first have to understand these terms:
Insurance premiums are the monetary amount you are required to pay for an insurance policy. Payment for the insurance premiums may come in various options as agreed with your insurer, such as monthly installments. Prices of premiums vary and can depend on factors like the type of coverage you opt for, your age, your car’s make and model, driving experience and your claims history.
The excess payment is the amount you will be needed to fork out of your pocket for getting your car or the other driver’s car damaged, before your insurance company covers the remaining sum. If your policy has a higher excess, your premium to pay would be lower, and vice versa. Though it may sound enticing to have a high excess to lower your premium, you could end up paying a greater amount should you run into an accident.
To make the ‘best’ choice, gauge if you are a confident or not-so-experienced driver to determine the level of excess, and at the same time making sure that the chosen excess is a comfortable amount that you can pay out. On the bright side, most insurers will allow you to adjust the excess amount based on your circumstance and budget.
3. No Claims Discount (NCD)
As the name goes, your insurance company will reward you in the form of discounts on your premium for the following year if you have not made a claim for that year. However, if you have made a claim, your NCD will be lowered and the amount of discount would depend on your insurer’s criteria.
As NCD is pretty enticing, some drivers would rather pay for small accidents or damages instead of submitting a claim. The NCD is usually tagged onto the driver’s name and not to the particular car so changing to a fresh new car will not erase your NCD records, for good or for bad.
4. Main Driver
The main driver covered in your policy is the one who will be insured. For families that utilise a shared vehicle, it is important to include named drivers which grants them coverage. Certain insurers will allow you to add up to 5 named drivers without a fee but others may do otherwise. Be sure to find out from your insurance company and read the fine prints.
As with the different factors that account for the premium to be paid, there are no fixed costs for insurance premiums, even if both drivers own the same car and opt for the same policy. How the premiums are calculated will take into consideration several factors aforementioned and basically gauges how much risks are involved to sufficiently cover you.
Late payment for the premiums could also result in additional fees so it is important for you to know your insurance policy well. Unfortunately, some premiums incur higher prices upon renewal and hence it is vital for you to check before proceeding to do so.
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When looking for car insurance suited to your needs, do not always opt for the cheapest as it does not necessarily mean it is the best.
To avoid getting into a sticky situation when liaising with your insurer, ensure that you have done your research and understood the lingo so that you do not end up feeling more overwhelmed than ever. Being equipped with some knowledge beats having none as you could even negotiate for a better deal.