How to Choose a Car Insurance Policy

After you’ve successfully purchased your first car in Singapore, you are pretty much psyched to take it out for a ride but just before you do, take the time to get your new ride the annual mandatory insurance it needs. For those who‘ve just purchased a new car, your car would most likely have insurance coverage as recommended by the dealer where you got your vehicle from. That should be okay, right?

But other than the annual fees, you also need to consider the specific coverage your insurance provider offers. After all, you should know what you’re paying for to get your money’s worth.

 

7 Things to Consider for choosing  your Car Insurance Policy

 

If you are getting or renewing your car insurance for the first time, here are some of the things that you need to consider to help you choose a good plan:

1. Car Insurance Annual Premium

The premium of a policy is what you need to pay on a yearly basis to access your insurance coverage. Each insurance provider offers varying annual premium rates and this is also subject to the Risk Factor Rating System which all insurance companies follow. This system determines how likely an individual will get into an accident based on several factors such as age, gender, driving experience etc. This only means that if you are likely to get involved in accidents, then your premium will also be higher for your own benefit.

 

That’s one way to look at it. More importantly, you need to watch out for low-cost premiums because some companies may place hidden charges to keep their earnings at par with their competitor’s rate but snag unsuspecting buyers to earn more in the process.

 

While these things do happen, there’s also the bright side of things. If you’ve been a good and careful driver and have not made any accident claim for at least an entire year, you can get a 10% discount off your annual premium per year but this may also vary between insurance companies. This is known as the No-Claim Discount or NCD. Also, you can opt to get an NCD protector for an additional fee. This will let you keep your discount if you haven’t made any claims in five years. So, it truly pays to follow the rules and to be careful on the road.

2. Excess

The ‘excess’ is the fee you need to pay if you want to make a claim to cover the entire cost of the car damage incurred. This is what insurance companies use to protect themselves from going bankrupt. This, at the same time, aims to make drivers more conscientious on the road despite being insured. Because that’s how people are, right? We think we’re all good as long as there’s insurance to cover up the mess we make (due to our recklessness). Also ,it’s important to note that the excess is inversely proportional to your premium. Meaning, if you pay higher excess, you can save up on your premium and vice versa. In application, you could choose to save on your premium, but you’d need to pay more for the excess if ever you get into an accident.

 

3. Named Driver Excess

This somewhat mirrors the second point but for additional driver(s) you apply in your insurance plan. This is important because if you apply multiple drivers in your policy coverage, this could well mean an increase in your premium as well. That, and potentially lower excess fees in case they get in an accident while driving your car. Be careful with who you choose to apply with your policy because your premium will simply go up if you do not consider how the Risk Factor Rating System works. The most logical thing, would be to keep from adding multiple drivers in your policy unless they drive your car on a regular basis. Because who wants to pay higher annual premiums over pricey one-time excess fees on the improbable chance of someone getting into an accident while driving your car? Surely there’s a better way…

 

4. Comprehensive versus Third Party Coverage

As the name suggests, comprehensive policies offer broader coverage leaving out only damages caused by natural disasters, civil unrest, and nuclear terrorism. On the other hand, third-party policies offer limited coverage for a lower premium, of course, shouldering the costs for the other party’s damages but not your own. Usually, cars below 10 years old and those under finance plans fall on the comprehensive package and could only make the switch when they reach eight years old or once they’re fully paid in the bank. If you’re a COE holder and your car’s over 10 years old, consider switching to a third party policy to save up on annual premiums because if your car gets into an accident you might just want to scrap it altogether and get a new one than to have it repaired.

 

5. Authorized versus Any auto repair shop

Insurance companies have a list of car service and repair shops they authorize for repair work covered by insurance. Check your car insurance policy if it only sticks to its list of authorized repair centers or if it also lets you choose your preferred workshop to fix your car. Some insurance companies do offer this flexibility but with a price. While it’s great to know that some insurance companies are tied up with a lot of workshops, you can also check with your preferred car repair center if they work with any insurance provider so you can factor that in too when choosing a car insurance policy.

 

6. Loss of Use Benefits

In the event that your car gets into an accident and is taken in for repair in the workshop for god-knows-until-when, some insurance policies provide some sort of benefit to help you get around during this period. Some companies will provide a car replacement while yours is still on repair for a number of days only. Other companies may give you transportation allowance for the days you are without a car to go around the city. These are just some of the benefits you get if your car is insured. Also, the benefits and provisions vary depending on your policy, really.

 

7. Terms and Conditions

As you can picture by now, car insurance policies are very important if you have or are planning on getting a car in Singapore. As with any major transactions or investments you make it’s highly important to understand the terms and conditions when signing up for your car insurance policy so that no stones are left unturned, and also to prevent incurring penalties for any invalid claims you might make in case you get into an accident.

 

To give an example, the subject of LTA-approved car modifications has been a hot topic among policy holders since many have thought that getting car modifications approved by the LTA will not affect car insurance coverage, or so they thought. Yes, there were shocking cases where the company scrapped the driver’s insurance plan because the modifications made on his car deviated from the standard specifications provided by the manufacturer even if they were approved by the LTA. The takeaway for all you car owners and would-be car insurance policy holders out there is to read and understand the terms and conditions to know what you’re getting into before you sign on the dotted line.

 

Getting car insurance is a mandatory requirement for all car owners in Singapore. Whether it’s out of necessity or compliance, the benefits of having car insurance can be maximized if you pay close attention to and understand the provisions and conditions of your insurance plan. Here’s to your safe and happy driving!