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How Carro’s New Usage-Based, Pay-Per-Kilometre Insurance Could Appeal To Car Owners In Singapore

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How Carro’s New Usage-Based, Pay-Per-Kilometre Insurance Could Appeal To Car Owners In Singapore

Pay only what you use — no more, no less — ideal for those who don’t drive frequently. Here’s what Singapore’s first artificial intelligence-driven, pay-per-kilometre insurance plan has to offer. 

Carro, Southeast Asia’s largest automotive marketplace, was recently in the news for being one of the top 10 fastest growing companies in Singapore in 2021

On Carro, you can buy and sell both new or used vehicles, just like how you’d transact on platforms like Carousell. Buying and selling aside, you can also rent or lease a car on Carro. They even offer car loans, provide car repair and maintenance services at their workshop and share COE bidding results on their site. 

Covered — Carro’s artificial intelligence-driven, pay-per-kilometre insurance plan

Carro has just launched Covered, an artificial intelligence (AI) driven, pay-per-kilometre insurance that’s the first of its kind in Singapore. 

The introduction of this plan stems from the rise of usage-based insurance — you might find it similar to claims-based pricing that adjusts and determines your premiums based on the number claims you make (or don’t make) over the past year. 

Under this new car insurance plan that’s underwritten by NTUC Income, drivers of all types of cars, including electric vehicles (EVs), can now tailor insurance premiums and maintenance coverage according to their lifestyles. 

Covered provides coverage at S$0 excess for Third Party and Own Damage (repairing at an Income approved workshop), and is available for all private car drivers, regardless of age (with a minimum age of 18) and driving experience. How much you pay in premiums will depend on your driving habits, vehicle type and driver history. Do keep in mind that Carro’s subscription cars are strictly for personal use and cannot be used for commercial purposes, such as private hire services. 

Here’s how Covered works: 

  1. You’ll first have to choose from three different plans: Drivo Classic, Third Party Fire & Theft or Third Party, with Drivo Classic being the most comprehensive plan. This is a completely digital sign-up process — simply follow the steps to complete your registration. 
  2. Pay an annual coverage fee of S$150. You can almost view this like the annual fee you pay when using a credit card. 
  3. Get billed at the end of each month, with payment based on the mileage covered.

How will Carro know how many kilometres you’ve driven? Once you’ve signed up and paid the annual coverage fee, you’ll have to install the Carro IQ device — a telematics unit that will help to track the car’s odometer data. This data will be used to calculate usage-based insurance and maintenance charges.

How much are the mileage charges? According to Carro, the rates per kilometre will differ and are determined by your age, type of vehicle and driving experience. The average rate is $0.12 per kilometre. 

To get a better understanding of whether this usage-based insurance will suit your lifestyle, here are some of the pros and cons to consider. 

Benefits of using pay-per-kilometre car insuranceCons of pay-per-kilometre car insurance
Pay only what you use, no more, no less. This can mean significant savings for car owners who don’t drive too often or too far.If you’re a heavy user, you could end up paying more than what you would have paid if you opted for a car insurance plan that charges a predetermined annual premium. 
If you have limited funds, the immediate out-of-pocket cost of the insurance premium is low at just S$150 annually, with the additional cost for the mileage being billed at the end of each month. 
Comparatively, traditional car insurance plans can incur a larger lump-sum cost, though this can be side-stepped by paying via instalments.
You don’t enjoy the No Claims Discount (NCD) traditional car insurance plans have to offer. The discounts range from 10% to 50% of your premium, depending on your driving history. 
Your original No Claims Discount (NCD) amount will not be affected if you switch back to any motor insurance from NTUC income.Limited choices as this is currently only offered by Carro. You will also have to manually install the Carro IQ device.
Comes with Maintenance Prime, which includes basic servicing, fluid top-ups, inspection and towing*Upgrade to Plus or Pro to have inspection by way of a 150-point check free of charge
You’ll have to pay an extra S$1,500 if you choose to repair your vehicle at your preferred workshop that is not one of Income’s quality-assured workshops. 

Other usage-based services in Singapore

The business model is straightforward: you only pay for what you use. 

Other products that have adopted usage-based pricing include car-sharing platforms such as Tribecar, and bicycle-sharing platforms like SG Bike and Anywheel, where you pay based on how long you’re renting the vehicle.

There’s also GetGo — a new car-sharing service launched this February —  that charges a base per-hour fee and an additional charge of $0.40 per kilometre. This way, you only pay based on hours and mileage. Other costs of owning a car, such as insurance, maintenance and petrol, will be covered by GetGo. 

The opposite of usage-based pricing? Subscription services. 

There’s merit in both business models: pay per use vs subscription. Subscription services allow companies to project their expected revenue based on the number of subscribers. For consumers, a subscription service allows you to utilise the service without having to track and calculate your usage.

Examples of successful subscription services include Netflix, Disney+, Spotify, Adobe and the many different types of gym memberships here in Singapore.

So, should you get Carro’s pay-per-kilometre insurance plan? 

Choosing between a pay-per-kilometre car insurance and your traditional annual premium insurance is like choosing between dining a la carte and going for a buffet. They both serve the same purpose of filling your belly, but at different costs. 

It ultimately depends on your lifestyle habits, consumption amount and personal preference. 

Read these next:
Best Car Insurance Plans in Singapore
Car Sharing Options In Singapore
How Much Does It Truly Cost To Maintain A Car In Singapore?
7 Facts You Need to Know About Car Rental Insurance in Singapore
What You Need To Know And How These 5 Factors Determine Your Car Insurance Premium


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.