In Singapore, it is not just risky to drive without car insurance – it is against the law. Even if you don’t want full comprehensive car insurance, at the very least you need to have third- party car insurance to cover damages to someone else’s car or property, or in case they are seriously hurt.
We have three types of car insurance policies to choose from.
- Third Party Only is the most basic car insurance plan and covers your legal responsibility for damage to other people’s property or bodily injury or death to other people caused by an accident involving your car. It doesn’t cover damage to your own car.
- Third Party Fire and Theft covers the same as Third Party Only plus loss or damage to your car if it is stolen or catches fire.
- Comprehensive covers the same as Third Party Fire and Theft plus any damage to your car up to its market value.
An excess is the amount you have to pay from your own pocket before the insurer pays you for the coverage you have.
Most insurers quote for an excess of $500 or $600 by default, but you can always choose a higher excess in exchange for a cheaper premium. However, be warned that you will have to pay more upfront if you get into an accident.
Ultimately, you need to strike a balance between the two costs - so that you are neither overpaying for insurance, nor will an accident render you penniless.
"Authorised workshops" are a list of workshops that your insurer has approved. You can get a cheaper rate if you don't mind being restricted to authorised workshops only, though be sure to check that the list does give you sufficient options. People who choose this usually drive older cars or second-hand cars that are no longer under warranty.
"Any workshop" means you can go to any workshop of your choice, but this will mean a higher premium on your car insurance. If your car is still under warranty, you may have to opt for this in order to send your car to your dealer's workshop. Otherwise, your dealer may decide that your warranty is void.
"Named drivers" means that you have explicitly and contractually stated on the insurance who you want to be covered. Other than yourself, this should also include regular users of the car, for example, your spouse.
"Unnamed drivers" just refers to drivers who are not on it. They can still drive the car, but if they get your car in an accident, the insurer will cover significantly less of the damage.
You can always add more named drivers for maximum protection, but it will cost you more, especially if you name someone who is a young and inexperienced driver.
For every year that you've driven and didn't have to make a claim, you get a 10% discount on the following year's premium. You can accumulate your No Claim Discount (NCD) up to a maximum of 50%, i.e. after 5 claim-free years.
Getting a 50% discount on your premium sounds great, but remember that the car insurance company can always increase the quoted premium, rendering your discount ineffective. Sneaky. So no matter what, don't just auto-renew - you should still compare quotes anyway.
But what if you make an insurance claim? Under normal circumstances, the discount drops by 30% (from 50% to 20%, for example). That's why most insurers also offer what's called an "NCD Protector" as a paid add-on to your car insurance policy. This allows you to make one claim without affecting your NCD.
Different insurers have different processes on how to make a claim, however, but in general, these are the steps::
- Don’t move your car unless absolutely necessary.
- Call your insurer's hotline for assistance.
- Take (lots of) photos of the accident.
- Get the other driver's contact details.
- Get your car fixed at an authorized workshop.
- If you are a relatively inexperienced driver, you might want to opt for a car insurance company that is better known for its roadside assistance. For example, NTUC Income has a fleet of assistance riders who will come down to the site of your accident and walk you through every step of the way.
Check the terms and conditions of your existing car insurance policy to find out what happens if you cancel it. Generally, if you cancel it before it is time to renew, the insurer will pocket about 30% of the unused portion of your insurance, leaving only about 70% as a refund for you.
If you can, wait until your car insurance is up for renewal. Then you'll have the freedom to switch to any insurer you like without any penalty.
By the way, you may not always be the one walking away from a car insurance policy. There are also situations where your insurer might decide to drop you (sometimes with no refund at all) if they think there's foul play or illegal modifications going on.
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