First things first, car insurance is mandatory in Singapore. According to the Motor Vehicles (Third-Party Risks & Compensation) Act, it is compulsory for one to purchase a car insurance plan for coverage if you want to drive on the roads. The insurance must at least cover the injury or death caused by your vehicle.
If you are found not to have insurance, the consequences could be dire. You can get fined up to $1000, jailed up to 3 months, or both. You will also be banned from holding or obtaining a driving license for 12 months from the date charged.
So if car insurance is a purchase you are going to have to make sooner or later, here are the two things to look out for when buying car insurance, and one way you can reduce your premiums.
The first thing you want to think about is what kind of coverage you need. There are typically three kinds of coverage that insurers provide in Singapore: Comprehensive, Third-Party, Fire & Theft (TPFT), and Third-Party Only (TPO).
Let’s start with TPO. TPO coverage is the most basic coverage. It covers any damage done by you to another person or vehicle while on the road. In the event that you get into an accident, this covers the car repair and medical expenses you owe to another person. This type of plan is the bare minimum the Singapore Government accepts if you will be on the road. It is also the most affordable, making it good for those on a budget.
Next is TPTF. Think of this as the middle-tier plan. It covers everything TPO does but also provides additional benefits such as coverage from losses due to accidental fire or in the event of theft. Naturally, this is slightly more expensive than TPO.
Lastly we have comprehensive coverage and as the name suggests, this type of plan is meant to be comprehensive. It covers many other things apart from what TPO and TPTF plans cover. For example, this covers damages to your car, your belongings, and most importantly, yourself and your passengers. This makes it the most well-rounded and also the most commonly used plan.
2. Policy excess
Another important thing to take note of is the policy excess associated with a plan. Policy excess is the money the insured driver has to pay the insurance company when filing for a claim. This is also called a deductible, and usually comes in percentages.
For example, if the deductible is 10% and the total cost of repair is S$1,000, the insurance company will pay S$900 while the driver will be required to pay the remaining S$100.
Usually low premium plans have high deductibles, so be sure to check thoroughly before purchasing a plan.
Lastly, we have one tip to help you reduce your premiums. The secret ingredient is making full use of your no-claims discount and getting as many rebates as you can.
If you drive carefully and do not make any claims for consecutive years (this differs from provider to provider), you can enjoy a no-claims discount of up to 50%.
Besides this, companies also offer lower prices for drivers that comply with certain conditions. For example, you may need to select a repair workshop prescribed by the company, or be required to install an in-car camera. If you do so, you will be subject to more rebates and less premiums.
For more tips, tricks, and general information on car insurance, be sure to take a look at our page which provides you the most complete information on car insurance.