5 Things You Need to Check When Getting or Renewing Your Car Insurance Policy

In order to drive a vehicle in Singapore, you’ll need two things: a driving licence, and a car insurance policy. 

Your driving licence is a one-and-done type of deal, once you pass the driving test, you’re cleared to drive until age 65, whereupon you’ll need to renew your licence online every three years. (Foreigners, however, only have a validity period of five years on their driving licences.)

However, car insurance is renewed on a yearly basis. That means it’s not exactly something you can get done once and forget about it forever. 

Indeed, there are several things you’ll need to check when your car insurance policy becomes due for renewal. Here are five of the most important ones.

1. Is your car insurance duration sufficient to cover your road tax renewal?

Motorists have to pay road tax in Singapore. This is prepaid on a 6- or 12-month basis. However, before you’re allowed to renew your road tax, you’ll have to have sufficient duration on your car insurance first.

In other words, your car insurance policy needs to cover up to or beyond the period in which your road tax is prepaid. For example:

This “mismatch” between road tax and car insurance expiry date can happen if you’re buying a second-hand car, as the previous owner would have cancelled their car insurance once they stopped driving the vehicle. 

If this happens to you, you’ll need to extend or renew your car insurance policy in order to renew your road tax.

2. Which motor insurance package should you get?

At a minimum, a car insurance policy in Singapore must offer third-party cover for death and bodily injury, as well as damage to property. This is so that accident victims can be properly compensated by insurance. 

You may have noticed that “third-party” cover only covers claims made against you, the driver. It does not offer you any benefits for damage to your vehicle, or injury suffered by you or your passengers. Also, what if your car is stolen, or a collision causes it to catch fire?

Of course, most drivers would want to cover themselves, their passengers and as well as any third parties against driving accidents. Hence, there are several types of car insurance packages offered by different insurers. 

Generally, these can be broken down into three packages:

The actual scope of coverage will differ between insurers, and some may even allow you to customise or extend your coverage with optional add-ons and riders. 

Obviously, the wider your suite of coverage, the more expensive your car insurance premium will be. While the bar for a qualifying car insurance plan is relatively low – you only need third party cover – consider very carefully whether this would be sufficient. 

In most cases, drivers would be best served with a comprehensive plan that covers against most common driving risks and potentially ruinous financial losses. 

The trick is to carefully weigh your needs and pay only for the coverage and benefits that you need, instead of splurging on those that you think you want.

This brings us to our next point.

3. What workshops are included in the car insurance plan?

Apparently, drivers in Singapore are so fussy about where they send their beloved vehicles for repairs that they don’t mind paying more for the privilege of choosing their own workshops. 

In many car insurance policies, the ability to choose your own car workshop is often available only on the higher-tier, costlier plans – if not outright offered as a paid add-on. Basic plans will usually only allow you to use workshops authorised by the insurer, and if your preferred workshop is not on the list, tough luck. 

The point is, not being able to choose your own workshop isn't necessarily a bad thing. You should check which workshops are included under the car insurance plan, and as long as they are reasonably able to service your car, there’s no point paying extra just in case you need to bring your vehicle to that one special workshop that only you and your inner circle knows about. 

Besides, the best outcome is not having to send your car for repairs in the first place, so which workshop you may send your car to shouldn’t really matter in the grand scheme of things.|

4. How much excess do you have to pay?

In insurance, “excess” means the amount that is not covered under your policy, and has to be paid out of your own pocket when making a claim. 

For car insurance policies, excess is commonly levied on two items – windscreen repairs, and for young drivers. We’ll take a look at each one in turn. 

Windscreen damage not resulting from an accident is usually counted as a separate benefit, and commonly has an excess of S$100 per claim. This means that you’ll need to pay S$100 out of your own pocket if you’re seeking to repair windscreen cracks or need to replace your vehicle’s windscreen entirely. The remainder of the bill – if any – will be paid by your insurer. 

It’s worth noting that some car insurance plans offer windscreen cover with no excess, especially for higher-tier plans. Once again, you’ll need to make your own judgement whether this constitutes a good deal. 

Now, the other, more significant excess, is the one levied on young drivers. The young driver excess is levied as an extra level of risk hedging, as younger drivers are considered to be more likely to get into traffic accidents, whether due to inexperience, impulsivity, or other factors. 

As such, if you or the person driving the car is under 27 years or so (this cut-off age can vary between insurers), you’ll be charged an excess that can go up to several thousand dollars. This excess will be deducted from the benefit paid out, which means you’ll need to pay it out of your own pocket.

For instance, if your insurer agrees to replace your car with an equivalent make and model, you’ll need to pay the excess to your insurer as part of the settlement of your insurance claim.

Further complicating the issue is that some insurers allow you to increase your excess in exchange for lower premiums. While you can pay less on your motor insurance this way, you will have to pay more should an accident occur. 

Clearly, the amount of excess chargeable on your car insurance plan can significantly impact the financial fallout of an accident. As such, you should be sure to check how much excess you have to pay when purchasing or renewing your car insurance plan. 

5. Is there an NCD Protector?

Car insurance premiums in Singapore are expensive, and can easily cost over S$1,000 a year – more if you’re considered a risky driver (inexperienced, younger, unmarried, or male).

Thankfully, insurers offer No-Claims Discount (NCD), a feature that entitles those with good driving records to premium discounts. 

In a nutshell, for every year a driver goes without making a motor insurance claim, they earn a 10% discount on their premium. This discount maxes out at 50% (after 5 consecutive, claim-free years). 

However, once a claim is made, you’ll get a penalty to your NCD, typically 30%. Here, have a look:

This means that one single accident is enough to wipe out three years of being careful! Although, it should be noted that your NCD is only reduced if you’re found to be partially or fully at fault for the accident. 

Still, losing your painstakingly accumulated NCD is costly, especially if you were counting on it to help offset the cost of a high-tier insurance plan. 

But there’s a solution. Several car insurance plans come with what’s known as an NCD Protector. As its name suggests, this protects your NCD from taking a hit for one at-fault accident you get into, which can shield you from taking a financial hit in the form of increased insurance premiums. 

Having an NCD Protector is undoubtedly helpful, especially if you’ve been driving accident-free for a while now. Therefore you should always check if there is an NCD Protector included in your car insurance policy, and if not, how you can add one. After all, there’s no reason to pass up potential savings of up to several hundred dollars a year.

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