Read this before you purchase your dream car. Some of these facts can help you to decide on a better car insurance plan or even ‘hack’ your way to a cheaper premium.
For all to-be car owners, besides shopping for your dream car, you’ll also have to start comparing the best car insurance plans around.
In order to own and drive a motor vehicle in Singapore, you’ll need car insurance. This not only protects you against any financial damages that arise from accidents, but also provides you and your passengers with coverage for medical expenses and more.
Here are 11 lesser-known facts about car insurance that you need to know before deciding on a car insurance plan.
#1 You can get a discount for a clean driving record
You can get a discount for your clean driving record by receiving the Certificate of Merit (COM) — a certificate issued by the Traffic Police for safe driving for three years. The COM deems you a low-risk driver and is an incentive for drivers to drive safely. This COM is a discount on top of your No Claims Discount (NCD).
To get yourself a COM, you must be free of traffic violations for at least three years. This means that you cannot rack up any demerit points in the three years before you purchase your car insurance policy, in order to be eligible for a COM.
However, being demerit point-free could be easier said than done for some. For example, driving 1 to 20km/hour over the road speed limit already warrants four demerit points. On the bright side, demerit points collected will be waived if you do not accumulate any additional demerit points for 12 months after your last offence.
If your driving record isn’t spotless, fret not, you can still enjoy your NCD when you don’t make a claim over the last year.
#2 No Claims Discount (NCD) is transferable
NCD refers to the discount you enjoy when you don’t make a claim on your car insurance plan. This can range from 10% to 50%, depending on the number of claims you make during the period of insurance.
Your NCD is tied to your name and is hence transferable. For example, if you have a 50% NCD and are planning to change your car insurance plan, you can request for your next car insurance company to transfer your existing NCD to the next policy, if it’s within the NCD validity period.
However, your NCD is not transferable to your friends or family — it is only transferable for plans under your name. There could be exceptions, such as your NCD being transferable to your spouse, though this is subject to the insurer.
#3 Your NCD will expire if you don’t buy car insurance for 1 to 2 years
Your NCD unfortunately has an ‘expiry date’. Upon the termination of your car insurance policy, the NCD you’ve earned will be valid for the next one to two years (depending on the insurer), after which, it will drop back to 0%.
If you decide to take a break from driving and not get a car, it means no discounts on your next car insurance plan once you let your NCD expire.
As a car owner, to maintain your NCD and keep your car insurance premiums low, you’d have to purchase your next car insurance plan within that time frame. Alternatively, you can always opt for car sharing options, take ride-hailing services or public transport instead of owning a car.
#4 You can keep your NCD even if you make a claim
Simply add on an NCD protector as a rider to your car insurance plan. The NCD protector is typically applicable to policies with at least 30% NCD, and will protect your NCD from getting knocked back down to 0% when you make a claim.
For some car insurers, you might even enjoy free NCD protection automatically if you have been enjoying 50% NCD over the past couple of years. Unlike your NCD, your NCD protector is not transferable from one insurer to another.
#5 Car insurance will cost the most in your early years
Unlike other insurance types such as life insurance and critical insurance that increase in cost as you age, the premiums of your car insurance plan can get cheaper as you get older. This is especially if you stay out of any accidents and avoid making any claims on your car insurance plan to enjoy higher NCD.
When you first own a car, you’ll have no NCD to enjoy, regardless how good your driving has been prior when you were driving your family car or using rental cars.
Due to the relative inexperience compared to those that have been on the roads for decades, premiums and excess are typically higher for young drivers. If you’re new to driving, while it will be more costly, it’s best to get a comprehensive plan (within your budget) to cover for all possible damages in the event of an accident.
#6 Your marital status can affect your premiums
Yes, whether you’re married or not can affect the premiums you pay for your car insurance. Marital status aside, your occupation (and how frequently you use your vehicle) can also be another determining factor.
Other factors that determine your car insurance premiums include your age, gender, years of driving experience, car model and more.
#7 You can pay premiums via instalments
The premiums for car insurance plans can cost anything from S$400 to upwards of S$3,000 — pretty hefty to fork out as a lump sum, one-time payment.
Just like other insurance plans, you can pay for your car insurance via instalments. These instalments can also be charged using your credit card — which gives you a chance to rack up some miles, cashback or points, though you’ll have to check which of the few credit cards will reward you for insurance payments.
#8 Get a replacement car if your car is totaled
Some insurers, such as MSIG, provide a brand new replacement car in the event that your car is irreparable after an accident. However, there could be additional terms and conditions that apply, such as the original car being less than 12 months old, or not being eligible if the car was stolen.
But this doesn’t mean you’re getting an instant upgrade (or downgrade). The insurer will replace your vehicle with a new vehicle of the same make, model and engine capacity.
If your car is repairable, you should instead check if your plan offers daily transport allowance for each day your car is under repair.
#9 Modified cars can still be insured
Modify your car, modify premiums. Be it installing a roof rack, changing your engine, adding a sunroof or adding turbochargers to your vehicle, it can still be insured – but you may be looking at increased premiums. If you do have plans to modify your vehicle, it’s best to first check if it’s within the Land Transport Authority (LTA) regulations.
You can also reach out to your preferred insurer, or the SingSaver insurance brokerage team at email@example.com or by phone at 31382648, to find out more about the plans and premiums for modified cars.
#10 It costs money to transfer car ownership
Car insurance aside, here are two additional final fun facts for aspiring car owners.
Just like how applying for a Build-To-Order (BTO) flat will cost you S$10, and like how applying for an Initial Public Offering (IPO) in Singapore will cost S$2 even if you don’t get allocated shares, you’ll also have to pay an admin fee for the transfer of car ownership.
While it is as simple as a click of a button after filling in the details online, it will cost you money to transfer ownership of a vehicle. This figure can vary from vehicle to vehicle.
#11 Bidding for your favourite car plate costs upwards of S$1,000
‘8888’, ‘5555’, ‘1234’ might be popular numbers for car plates (also known as the vehicle registration number) in Singapore.
If you have a preferred car plate, you can submit a bid to LTA. As the minimum bid amount is S$1,000 (with increments in multiples of S$1), it will cost you at least S$1,000 to secure a car plate of your choice. If you’re dead set on securing a specific vehicle registration number, the sky’s the limit in terms of the upper limit of the bid allowed.
The bidding is held weekly and all available numbers will be published on the website — so no, you can’t just provide a number of your choice, you’ll have to select from what’s available.
This might remind you of how you’d have to pay extra for a ‘nice’ mobile phone number and how some home units (such as those ending with 8) are able to fetch a higher price or are snapped up faster than others.
Do note that there is a non-refundable service fee of S$10 that’s charged for each bid submission you make. This fee is applicable even if you fail to secure your preferred car plate.
So, what should your car insurance cover?
Your car insurance coverage would depend on the type of plan you choose. Here’s an overview of the three main types available:
- Third Party Only: The most basic (and cheapest) type of car insurance plan, this covers injury or death to a third party, plus damage to others’ property. This does not cover the damage to your own vehicle.
- Third Party Fire and Theft: On top of what Third Party Only car insurance offers, this also covers fire damage or theft of your vehicle. Again, this does not cover the cost of other damages to your own vehicle.
- Comprehensive: The most all-encompassing plan type, a comprehensive plan includes what Third Party Fire and Theft covers, plus coverage for the repairs or replacement required for accidental damages to your vehicle. It can also include personal accident and medical expense coverage.
You’d also have to compare other perks and coverage terms offered by the insurer, such as whether 24/7 roadside assistance is provided, if there’s daily transport allowance and the excess that applies.
Armed with a better understanding of car insurance, check out some of the best plans available on the market below.
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By Ching Sue Mae
A flat white, an adventure-filled travel and a good workout is her fuel. This Manchester United fan enjoys sharing knowledge on personal finance while chasing the dream of financial independence.