How much car insurance do I need in Singapore?

Car insurance is a legal requirement for all vehicle owners in Singapore. It plays a vital role in protecting you financially in the event of accidents, theft, or other unforeseen incidents.

Choosing the right amount of car insurance coverage is essential to ensure you have adequate protection without spending more than necessary. While Third-Party Only (TPO) car insurance is the minimum legal requirement, it may not be sufficient to cover all potential costs.

This guide will help you understand how much car insurance you might need in Singapore and the factors to consider when making your decision.

What type of car insurance do I need?

Car insurance is a legal requirement for all vehicle owners in Singapore, with the minimum coverage level required by law being Third-Party Only (TPO). 

While meeting the minimum car insurance requirements in Singapore is mandatory, relying solely on third-party liability coverage can leave you financially exposed. TPO only covers damages or injuries you cause to others; it does not cover damage to your own vehicle or your own medical expenses.

Therefore, it's crucial to consider how much car insurance and how high a liability coverage limit you need to adequately protect yourself and your assets. In Singapore, these limits are typically set by the insurer and may vary. In a serious accident, such as a multi-car pile-up, the costs of medical treatment and property damage can quickly exceed the minimum coverage, leaving you personally liable for the remaining expenses.

Between TPO vs TPFT vs Comprehensive car insurance, it’s important to figure out which one suits your needs best, and if any add-ons are needed to help you achieve your desired coverage.

» MORE: How much insurance coverage do you need in Singapore?

What should my car insurance coverage level be?

The amount of car insurance coverage you need is closely tied to your net worth and financial circumstances. Sufficient liability coverage is vital to protect your assets, such as your savings, property, and investments, from potential lawsuits following an accident.

Here's a breakdown of how to think about how much car insurance you might need.

First, calculate the total value of your assets, including savings accounts; fixed deposits; investments in stocks, bonds, or unit trusts; property value(s); other valuable possessions. This figure represents the potential financial loss you could face in a lawsuit.

Then, select car insurance plans with bodily injury and property damage liability coverage limits that are high enough to protect your assets. Medical costs and car repair expenses can be significant in Singapore, so opting for higher liability limits is generally recommended for extra caution.

If you have substantial assets or high earning potential, you might want to consider even higher coverage limits to provide a greater safety net.

Here's an example to illustrate the importance of adequate liability coverage in Singapore:

Imagine you cause an accident that results in injuries to another driver and damage to their car. The medical bills for the injured driver amount to S$80,000, and the damage to their vehicle is S$30,000. If your liability coverage doesn’t exceed these amounts, you may be personally responsible for paying the difference—resulting in a significant blow to your financial stability.

Increasing car insurance coverage limits with personal liability insurance

While standard car insurance policies have maximum liability limits, umbrella personal liability insurance provides an extra layer of protection. It kicks in when your car insurance liability limits are exhausted, offering additional coverage in million-dollar increments.

For example, if you cause a serious accident with significant injuries and property damage, and the claims exceed your car insurance liability limits, your umbrella insurance policy would cover the remaining costs—protecting your savings and property.

Umbrella insurance is particularly useful for individuals with substantial assets in Singapore, such as high-value properties or significant investments, as it provides a financial safety net beyond the scope of typical car insurance.

»   MORE: All about personal liability insurance in Singapore

What to consider when buying car insurance

When comparing TPO, TPFT and Comprehensive car insurance in Singapore, it's essential to understand the different types of coverage and choose a policy that aligns with your specific needs and risk tolerance.

Third-Party Only (TPO) is the mandatory minimum coverage required by law in Singapore. It covers your legal responsibility for causing bodily injury or property damage to others in an accident.

Collision-only car insurance sits between TPO and TPFT in terms of coverage. It has a broader liability coverage than TPO when it comes to accidental damage, but doesn’t have fire- or theft-related coverage like TPFT.

Third Party, Fire and Theft (TPFT) includes TPO coverage plus fire damage to or theft of your vehicle.

Comprehensive coverage provides the broadest protection, covering damage to your own vehicle from a variety of incidents, including accidents, theft, fire, vandalism, and natural disasters (e.g. floods).

When deciding between these types of auto insurance, consider the following:

• Vehicle value: For newer or more expensive cars, comprehensive and collision coverage are generally recommended to protect your investment.

• Financial situation: If you can easily afford to repair or replace your vehicle out-of-pocket, you might opt for lower coverage options like TPO or TPFT to reduce your premiums.

• Risk tolerance: Assess your comfort level with potential financial losses due to accidents or other incidents.

In addition to the standard types of car insurance coverage, consider these optional add-ons:

Personal accident coverage covers medical expenses and other losses for you and your passengers in case of an accident, regardless of who is at fault.

Similar to personal accident coverage, medical expenses coverage pays for medical treatment for you and your passengers after an accident.

Uninsured/underinsured motorist coverage protects you if you're hit by a driver who doesn't have insurance or has insufficient coverage to pay for your damages. While Singapore has a relatively high rate of insured drivers, this coverage can still provide valuable protection.

Rideshare insurance protects Grab, Gojek, Tada, and other private-hire vehicle drivers by bridging gaps between personal auto insurance and the coverage offered by their respective platforms.

Roadside assistance provides help if your car breaks down, such as towing, battery jump-starts, or tire changes.

Windscreen coverage covers the cost of repairing or replacing a damaged windscreen, which can be a common occurrence due to road debris or rear-end collisions.

Loss of use/courtesy car provides a temporary replacement vehicle while yours is being repaired after an accident, minimising disruption to your daily life.

The decision to add these optional coverages depends on your individual needs and risk assessment. Keep in mind that these optional add-ons increase your car insurance premiums so you need to strike a balance between adequate coverage and maintaining your financial situation.

By carefully evaluating your car insurance options and considering the factors outlined in this guide, you can determine how much car insurance you need and choose the best car insurance in Singapore to protect yourself and your finances.