A Guide to Car Insurance for New Drivers in Singapore

Getting car insurance as a new driver in Singapore can feel daunting, but it is crucial for anyone hitting the road. Whether you're a young driver who just got their driver’s license or someone returning to the wheel after a break, insurance companies view drivers without a recent driving record as high-risk. 

This guide will cover what you need to know to navigate the process and find the right coverage for your needs.

If you're a new driver in Singapore, understanding your car insurance requirements and options is essential.

Here’s what you need to know:

• As required by the Motor Vehicles Act, all drivers in Singapore must have at least third-party liability insurance.

• “New drivers” are typically those with less than two years of driving experience or under the age of 25.

• Insurance premiums for new drivers are often higher due to their lack of experience on the road.

• Drivers with a gap in driving experience or insurance coverage may also be considered “new drivers” by insurers.

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Teenagers

​Insurance companies in Singapore charge higher premiums for teenage drivers primarily due to the risk associated with their inexperience. Generally, drivers under 25 years of age are more prone to accidents, with their claims costs significantly higher compared to more experienced drivers. This increased risk leads insurers to adjust premiums accordingly to cover potential claim expenses. ​

Additionally, teenage drivers typically lack a No Claim Discount (NCD), which rewards claim-free years with reduced premiums. Without this discount, insurers perceive teenage drivers as higher-risk, further contributing to elevated insurance costs. ​

To mitigate high insurance costs, teenagers can consider options such as increasing the voluntary excess (the amount paid out-of-pocket before insurance coverage kicks in) to lower premiums. However, this approach requires careful financial consideration to ensure low costs during a claim. ​

Ways for teens and young drivers to get cheaper car insurance in Singapore

For teenagers and young drivers in Singapore looking to secure affordable car insurance, it's crucial to research and compare quotes from multiple insurers. Prices can vary, so using online comparison tools can help find the best rates. 

When choosing coverage, it is also important to understand the different types available—Third-Party Only (TPO), Third-Party Fire and Theft (TPFT), and Comprehensive. 

While Comprehensive coverage offers the most protection, it may be more expensive, so selecting the right balance of cost and protection is key. Another way to reduce premiums is by opting for a higher excess (deductible), although this means you’ll pay more out-of-pocket if you need to make a claim. 

Finally, maintaining a clean driving record, free of traffic violations and accidents, can help in reducing premiums over time, and some insurers offer NCD for drivers who remain claim-free.

Cheapest car insurance rates for new or young drivers in Singapore

Here are the average annual rates for new or young drivers from some of the best insurers in Singapore:

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Immigrants and foreign nationals in Singapore

In Singapore, immigrants and foreign nationals can obtain auto insurance, provided they meet certain criteria set by insurance providers. Typically, insurers require applicants to possess a valid Singapore driving license and meet age and driving experience requirements. 

For example, OCBC's AutoWise Car Insurance mandates that applicants be from 26 to 69 years old, hold a valid Singapore driving license, and have at least three years of driving experience.

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Additionally, the Automobile Association of Singapore offers the AA Overseas Accident Plan. This plan is available to Singapore Citizens, Permanent Residents, and foreigners in Singapore with a valid employment pass, S-pass, or work permit, along with a valid Singapore driving license.

It's important to note that driving in Singapore without proper insurance is illegal. Therefore, immigrants and foreign nationals planning to drive should ensure they secure appropriate auto insurance coverage that complies with local regulations and meets their specific needs. 

Drivers in Singapore with a driving or coverage gap

​In Singapore, maintaining continuous car insurance coverage is essential. A gap in coverage can result in higher premiums, as insurers may view such drivers as higher risk. ​

To mitigate this, it's advisable to maintain uninterrupted insurance coverage. Additionally, enrolling in refresher driving courses can convey a commitment to safe driving, leading to better insurance rates. ​

Furthermore, a No-Claim Discount (NCD) is an incentive for drivers who have not made any claims during their policy period. Maintaining a clean driving record and continuous coverage can help accumulate NCDs, resulting in reduced premiums over time. ​

Thus, to avoid increased insurance costs, it's crucial to maintain continuous coverage and consider refresher courses to enhance driving skills and safety awareness.

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In Singapore, factors that affect car insurance premiums include the following:

• Driver's profile: Insurers assess age, gender, marital status, occupation, and driving experience to determine risk levels. For instance, male drivers and those under 25 years of age often face higher premiums due to statistically higher accident rates. Additionally, certain occupations such as sales jobs requiring extensive road use may lead to increased premiums.

• Vehicle details: The car's make, model, age, and usage significantly impact insurance costs. For instance, newer vehicles often attract higher premiums due to costly repairs, while premiums may decrease as the car ages, stabilising after about 10 years.

• Coverage type: The chosen level of coverage affects premiums. Comprehensive policies, covering a wide range of incidents, generally have higher premiums compared to Third-Party Only (TPO) or Third-Party, Fire and Theft (TPFT) options.

• No Claim Discount (NCD): Maintaining a claim-free record rewards drivers with NCDs, leading to significant premium reductions. In Singapore, NCDs can accumulate up to 50% over five consecutive claim-free years. However, a claim can reduce the NCD by 30%, increasing future premiums.

Understanding these factors allows Singapore drivers to make informed decisions, potentially reducing insurance costs through safe driving practices and strategic coverage choices. 

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New drivers in Singapore can adopt several strategies to reduce car insurance premiums:​

• Accelerate NCD accumulation: Insurers offer NCDs as incentives for claim-free years, with discounts increasing by 10% annually up to a maximum of 50%. Some insurers provide schemes that allow drivers to earn these discounts faster, further reducing premiums.​

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• Participate in usage-based insurance programmes: Usage-based car insurance (UBI) programmes monitor driving habits through telematics devices, offering discounts for safe driving behaviours. In Singapore, providers like Carro offer UBI plans where drivers pay based on their actual usage, potentially leading to savings. ​

• Seek affiliation discounts: Certain insurers offer discounts to members of specific organisations or professions. For example, Budget Direct provides additional discounts for drivers with a Certificate of Merit from the Singapore Traffic Police, awarded to those with a demerit-point-free record for three continuous years. ​

• Bundle insurance policies: Combining car insurance with other policies, such as health insurance, can lead to multi-policy discounts. While specific rates vary, bundling often results in significant savings. ​

By implementing these strategies, new drivers in Singapore can effectively lower their car insurance costs while maintaining adequate coverage.