types of car insurance singapore

3 Types of Car Insurance Singapore: Which Should You Get?

Singapore’s road fatalities are increasing again. The number of deaths has grown from 83 in 2020 to 107 last year: a one-third augmented across the country. Besides being vigilant and playing safe on the road, you should find other ways to protect yourself, your family, and other road users, including drivers and pedestrians.

Car insurance is a valuable option post-accident. Apart from being a legal requirement for car owners, comprehensive car insurance provides all-around protection to parties involved in an accident. The article offers a helpful guide if you are shopping for a suitable car insurance policy.

How Much Does Car Insurance Cost 

Premiums for a car insurance policy vary depending on several diverse factors as an applicant and coverage needed. The following information provides a guide for car insurance when an insurance company weighs on insurance premiums.

Factors to be considered

Details

Driver’s age

The younger or older a driver’s age, the more expensive car insurance premiums. Premiums for drivers aged 20 to 65 are the lowest relative to other age groups.

Driving experience

Experience on the road is critical when an insurance company considers an insurance rate for a policy. Typically, applicants with driving experience of 4 years or above get better rates.

Driver’s gender

Whether you agree or not, women can get better rates than men, who are prone to higher accident rates.

Claims history

Applicants with no or few claims records get lower premiums for car insurance.

Driver’s marital status

Though controversial, a married applicant can get a lower rate than an unmarried one because insurance companies see them as a more responsible driver.

Driver’s occupation

Insurance companies view an applicant’s job duties as related to high or low vehicle usage. High usage links to higher premiums.

Models

Insurance rates for standard models are lower due to spare part costs. The reverse is for premium models.

 

How Should I Lower Car Insurance Premiums?

Though you cannot change premium rates, age, or driving experience as determined by insurance companies, there are many steps you can still take to lower your insurance premiums for your car. Some of them are as follows.

1. Coverage

Applicants can choose coverages to suit their needs and lower premiums. Three popular car insurance plans are available in Singapore and include mandatory legal protection requirements for car owners. They primarily comprise third-party-only(TPO), third-party fire & theft(TPFT), and comprehensive policy.

A TPO provides essential, legally required coverage like a third party’s bodily and property damage and legal expenses. TPFT covers damage caused to your vehicle due to theft and fire, besides the third-party-only protections. 

Comprehensive insurance is diverse, including coverages from the formers, collisions and crashes due to accidents, natural disasters, windscreen damage, and personal accident coverages. You can adjust premiums by choosing coverages.

2. No claim discount(NCD)

It is a premium discount for a car insurance policy. An insurance company can offer a reduction of up to 50% in premiums if you incur none or fewer insurance claims over the last year. 

Furthermore, you can use a tip to save more: you can be exempt from a premium increase even if you file claims within the last year. Yes, you should buy an insurance add-on: the NCD protector. Some extra costs protect you from possible increases in premiums in case of accident claims.

3. Insurance excess

It is an expense you should bear, and the insurance company pays the remaining compensation as promised during a claim. 

If your insurance policy states an insurance excess of SGD1,500 for car damage due to an accident, you are responsible for the expense, whether the damage claim is SGD10,000 or SGD50,000. Therefore, you can get SGD8,500 or SGD38,500 only if the insurance company approves the claim.

Insurance companies may allow lower premiums by offering several insurance excess options. A lower excess option means higher premiums and vice versa for a higher insurance excess.

A lower premium option is not necessarily a good choice as you must bear more expenses if a claim arises. But you may pay a higher premium to lessen your out-of-pocket expenses by paying higher premiums for your policy. Therefore, you should better discuss with your insurance advisor for the best solution.

4. Workshops

A workshop is a place to repair your car once it is damaged in an accident. Regarding a car insurance policy, you can choose authorized and free workshops. An authorized workshop is a factor specified by an insurance company for repair. A car owner can get compensation if he chooses an authorized workshop. A free workshop is any workshop or workshop of a car owner’s choice to repair. A car owner selecting this option can get compensation from any workshop choice.

An applicant choosing a free workshop option should pay a higher premium over an authorized workshop. Some car owners would rather pay higher premiums for the freedom to put their cars to trusted technicians. Budget owners may choose a cheaper one with an authorized option.

5. Car model and age

Premiums for mass-market models and premium brands may differ significantly in premium amounts. High-end vehicles like Porsche or Maserati have higher repair costs, while Honda’s brands like Civic and Accord or Toyota’s Camry require lower repair and replacement costs concerning spare parts.

A vehicle’s age may increase premium rates. Cars of more than 10 years are prone to car accidents due to wear and tear. You may love a brand new car with special care from the day you bought it. Also, with advanced technology, a new car is better in capacity to lower the chances of accidents.

A new and market-standard car model reduces your insurance expenses, and you have to pay higher premiums for high-end cars of older ages(except for unique and antique cars.)

6. Usage

The miles your car pounds on the road, the more the wear and tear are. A car with high mile usage may be more vulnerable to severe damages caused by accidents. Insurance companies may impose additional premiums on car owners of this type.

7. Claim performance

If you incur more car insurance claims over your driving history, you have to pay higher premiums due to your records. An insurance company may view you are more likely to cause accidents than others and only accept your application for increased premiums. To reduce car insurance expenses, one should be cautious on the road.

Woman choosing a car in a car showroom

Three Types of Car Insurance Plans in Singapore

What’s the best car insurance plan? It dependents on your needs. The three types of coverage available are: Third-party only (TPO), Third-Party, Fire and Theft(TPFT), and Comprehensive. We break down each type below to let you choose which is right for you.

At a glance

Third-Party Only(TPO) Third-Party, Fire and Theft(TPFT)

Comprehensive(COMP)

A third-party’s bodily injury caused by a car accident

 ✔

Damage to a third party’s property caused by a car accident

 ✔

Legal expenses caused due to a car accident

Car damage due to theft

Car damage due to fire

 ✔

Damage to your vehicle due to crash other than collision

Damage to your car due to collision by accident

Damage caused by a natural disaster

Windscreen or window damage caused by accident

Accidental damage other than a car crash

 

1. Third-Party Only(TPO) – For budget car owners fulfilling basic legal obligations

Third-Party Only insurance provides essential and legally mandatory car insurance to car owners and covers legal liabilities arising from a car accident due to your responsibility. 

The liability may range from a third party’s bodily injury and death, medical expenses, and financial loss to a third party’s property damage caused by you. The policy also covers legal costs incurred.

Coverage and Limitations

Coverages include all the requirements, particularly legal liability arising from personal injury, death, property damage, and legal expenses by the laws. TPO’s maximum liability cover can be up to SGD5,000,000 and is the cheapest policy among the 3 types of car insurance policies.

However, TPO lacks comprehensive coverages like a car owner’s personal protection and insured car’s covers. And no additional insurance add-ons are available.

You should get a Third-Party-Only car insurance plan if you are a budget car owner or an infrequent driver who rarely uses the car.

Car doctor with stethoscope in a car showroom

2. Third-Party, Fire & Theft (TPFT) – For additional protection beyond mandatory requirements

Third-Party, Fire & Theft insurance is an in-between coverage between third-party-only(TPO) and a far-distanced-from comprehensive coverage plan and premiums. Besides basic coverage by TPO, TPFT covers car damages caused by fire and theft.

Coverage

TPFT applies to cars over 8 years, which may not be eligible for comprehensive insurance underwriting criteria. Car owners have a wide choice over the workshop. Usually, insurance companies lower premiums for clients using authorized workshops. Besides, TPFT covers spare parts and other accessories damaged caused by fire and theft.

Towing Charge and No-Claim-Discount (NCD)

Clients can claim a towing charge of up to SGD300 and purchase No-Claim-Discount as an additional insurance add-on to keep premiums low even if they have the first claim. And a 24-hour roadside assistance add-on is available for getting aid around the clock.

Limitations

But TPFT lacks crucial insurance coverage like windscreen damage, natural disasters, and value replacement protection. Car owners may be vulnerable to sudden and ruinous loss beyond fire and theft.

Moreover, the plan is a modified TPO version with only property protection against fire and theft. Still, it does not protect drivers and passengers due to death or injury, also excluding compensation amounts and medical expenses as most needed after an accident. And the policy does not cover the income loss due to injury and transportation allowance during a vehicle repair. 

You should get a TPFT if you need minimum protection only for your cars with more than 10 years.

3. Comprehensive Plan – For across-the-board coverage

A comprehensive car insurance plan has the broadest coverage providing car owners with the most expansive scope of protection. The coverage ranges from liability to personal accident insurance, indemnity, and property damages due to accidents and natural disasters.

Coverage

The policy covers a wide range of protection from accidental losses to natural disasters.

Furthermore, insurance companies are more willing than ever to offer premium discounts to comprehensive plan clients.

Accidents and Natural Disasters

The compensation due to an accident can be up to the total market value of your vehicle determined at the time of accidents or natural disasters. It covers the spare parts inside your car, like audio and video equipment. Besides, you can choose your workshop for repair or an authorized workshop to reduce excess or premiums.

Replacement Car Clause

The coverage even offers a lifetime guarantee on repaired parts from authorized workshops. The “Replacement car” clause on the comprehensive plan provides a new equivalent value to replace your car beyond repair. The replacement value is identical to the value at the time of an accident. But the clause applies to cars produced only within 12 or 24 months.

The comprehensive policy also pays for your windscreen damaged by accidents or natural disasters with no or minor excess from 0 to not exceeding SGD100. You can reimburse towing charges of SGD200 to 300 if the vehicle breaks down on the road. One additional benefit is you may get a courtesy car for work or study if your car is under repair due to unfortunate events. Or, you may choose a daily transport allowance instead.

Medical and Death Insurance

Besides, The comprehensive coverage offers personal injury or death insurance due to accidents and includes your belongings. Furthermore, the policy provides medical insurance to you, your family members, and other named and unnamed drivers for unexpected medical costs. A 24/7 roadside assistance is also available when you need aid and advice.

Limitations

However, some other insurance companies may require you to co-pay an insurance excess of up to SGD500 to SGD2,000 before they pay the rest. And you may have to pay higher premiums for having your car repaired rather than at a workshop specified by an insurance company. Finally, the premiums and excess for unnamed, young, and inexperienced drivers are higher.

You should get a comprehensive insurance plan if you need broad coverage for you, your family, and others on the road.

Family with bbay girl choosing a car in a car saloon

Things to Consider Before Purchasing a Car Insurance Plan in Singapore

Unfortunate events often exceed our expectations. An appropriate car insurance policy can be a solid backup for us even if an accident happens. That is what the word ” insurance” lies about! Besides being required by law to buy car insurance in Singapore, you also need the best insurance policy to protect yourself, others, and your properties while steering the wheel on the road.

Choosing a suitable car insurance policy is more than premiums as it involves personal accident benefits caused by injury and other benefits. You should consider the following factors and talk to your insurance advisor to make wise judgments.

1. Coverage Types

You should decide which is best for you before buying a car insurance policy.

The Third-Party-Only(TPO) car insurance is a primary insurance policy for budget and infrequent car users to fulfill legal requirements.

The TPFT adds more coverages to the TPO plan and provides minimum protections like damages by fire, theft, and legal expenses. The plan fits car owners requiring minimum protections for used vehicles.

Including the former 2 types of insurance benefits, most comprehensive car insurance plans cover broader events and offer across-the-board protection to car owners, drivers, and passengers like personal accident coverage and allowance indemnity. The comprehensive plan has the highest insurance costs among the 3.

You should talk to your advisor and choose the best car insurance based on your needs. This article provides valuable insight into car insurance plans, like coverage types, accident protections, and other indemnities, so that you can make the best decisions based on your individual preferences and circumstances

2. Budget for Insurance Premiums

An insurance premium is a part of the running costs for your car. If you choose a minimum and statutorily required Third-party Only policy, the premium is the lowest, around S$1,500. 

Or, you may pay two or three hundred dollars more to buy a basic policy with fire and theft insurance add-ons. Therefore, the 2 types of insurance coverage are appropriate options for budget car owners.

Opting for more protection for you and your family, you should choose comprehensive services providing broad coverage in case of an unfortunate event. 

The coverage may shield you from catastrophic losses of income and properties. 

Premiums differ and range from S$1,500 to S$2,500, depending on insurance plans, coverages, insurance add-ons, and insurance companies. 

3. Covered Workshops

Your choice of an auto workshop may increase the premium of your policy. You need a workshop when your car needs repair in an accident. If you request a choice of your preference over a workshop for service, insurance companies may add more insurance premiums to your policy due to potential costs incurred.

On the contrary, car insurance companies may lure applicants into using authorized workshops by lowering premiums or other hybrid options and rewards to motivate car policyholders to moderate premium amounts.

Generally, free choice of workshops has the highest premiums, authorized workshops for repair have the lowest premium, and a hybrid of options is in the middle price range.

4. No Claim Discount(NCD)

A No Claim Discount is a premium reduction in a percentage applying to policy renewal. An insurance company grants an NCD to a client upon the renewal date if the claims filed for the last policy year are less than specified. A policyholder may pay 30% to 50% fewer premiums for an auto policy for the following year.

An insurance company also offers an insurance add-on called a No Claim Discount Protector. The NCD protector protects against the possible reduction or cancellation of the add-on in case of a claim.

5. Insurance Excess

An insurance excess due to a claim is a compensation amount a plan holder should be responsible for; an insurance company pays the rest. A claimant requests a verified compensation of S$10,000 due to car damage in an accident. Your vehicle insurance policy specifies an excess of S$2,000. In this case, you should pay the first S$2,000 to the claimant, and an insurance company then pays the remaining S$8,000.

An insurance company may allow applicants to choose among excess options to adjust premiums. A policy with high insurance excess has lower car insurance premiums, while the others with low excess require higher premiums. 

In other words, a higher excess payment may outweigh the benefits of reducing premiums for a policy with a low excess when an accident occurs. You should review the ability to pay an excess with the premium budget in buying a car insurance policy.

6. Daily Transport Allowance

A daily transport allowance is a fixed amount of around S$80 per day to compensate for a transport expense. An insurance company distributes the allowance to a policyholder while an insured car is under repair due to an accident. You may consider including the insurance add-on to indemnify your travel expenses incurred during this period.

7. Roadside Assistance

It is an emergency service when your car breaks down on the road. Insurance companies provide Adhoc assistance and towing services besides the around-the-clock aid when you need it most.

New or inexperienced drivers may benefit most from the advice provided by the assistance at the time when getting confused and overwhelmed at an accident scene. You should consider the inclusion of the add-on by paying a little more premiums.

8. Young/Inexperienced Drivers

Young or inexperienced drivers aged below 27 are prone to higher premiums charged by insurance companies. Statistics show this driver class has a higher accident rate than others. The inclusion of young or inexperienced drivers may increase a policy premium.

But the premiums for a vehicle policy may lower if few claims arise or a No Claim Discount has increased for the previous year.

Besides, this group pays a higher excess than others for a claim. If you or your family member belongs to the group, you may have to pay higher premiums.

9. Compare car insurance premiums and policy coverages

The car insurance in Singapore is diverse. Insurance companies offer products with various benefits to clients. Besides the car insurance premiums, you should decide whether a comprehensive car insurance plan or basic coverage meets your needs. 

10. Appropriate coverage for your needs

You should ponder appropriate coverage for your car. If your car is brand new, you have better reasons to have full coverage covering the huge loss occurring in earlier days. But if you own a car of more than 10 years and for commute purposes only, you may not need much coverage unless it is an antique car. Therefore choosing appropriate coverage is essential before deciding on the best policy.

11. Premium discounts

Insurance companies use gifts and free services to appeal to car owners. Clients should ask for policy premium discounts an insurance company can offer without promotion. You may get a surprise if you try.

Bottom Line

Considering your options, you may get a hint from the following about how to select the best insurance policy with the lowest car insurance premium.

  • If you are a budget car owner fulfilling mandatory car insurance by law, TOP insurance is your choice.
  • Supposing you cannot obtain full coverage for your old car of more than 10 years, a TPFT is your sound choice for minimum protection provided.
  • You need complete protection for yourself, your family, and others on the road. Then, a comprehensive plan is your ultimate solution for all. But the premiums are the most expensive of all three types.

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