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Driver’s Guide to Buying a Car Insurance in Singapore

In Singapore, if you own a car, car insurance is compulsory. But even if insurance weren’t made compulsory, we are sure you would want to insure your car against accidents and damages, given how much a vehicle can cost in Singapore – after all, Singapore is one of the most expensive places in the world to own a car.  

There are many things to consider when it comes to buying motor insurance and this comprehensive guide will help you make an informed choice.

Why do you need car insurance?

Under the Motor Vehicles (Third-Party Risks & Compensation) Act, if you want to drive a vehicle on a public road in Singapore, you have to have insurance coverage, which will cover the death or injury of anyone caused by that vehicle. If you do not have insurance, you can be fined up to $1,000, jailed up to three months, or both. On top of that, you will also be disqualified from holding or obtaining a driving license for 12 months from the date you are convicted. 

Legal penalties aside, getting into an accident while driving without insurance could also cause financial ruin. Apart from having to pay for car repairs, if you injure someone, you could be sued for any losses, damages, and medical expenses. The amounts sued for in cases of serious injuries or death could run into hundreds of thousands of dollars, or even millions. This is a cost that will be borne by the insurance company if you take out a policy.  

So, having adequate car insurance is really about protecting yourself. 

 Types of Car Insurance

There are three types of car insurance to choose from: Third party only insurance; third party, fire and theft insurance; and comprehensive car insurance.  

Third-Party Only Insurance

Third Party Only (TPO) insurance is the option with the lowest cost, but it also provides the least coverage – it will cover only damages that you cause to other people’s property, such as their car, fences or streetlights. If you cause death or injuries to passengers and third parties, your insurance company will also cover that. 

The policy will not cover damages to your own car, however. 

So if you knock into someone’s car and dent both your car and the other person’s, your insurance will pay for the repair of the other person’s car, but it will not pay for you to repair your car. Any repairs to your car will have to be paid on your own.

Some people go for TPO insurance if they drive an older car that they don’t mind banging up a bit, or which they might be willing to scrap if the car becomes wrecked. 

TPO insurance is the minimum coverage you can have on your vehicle. Note that some insurance companies do not do TPO insurance. 

Third Party, Fire, and Theft

This policy is like the third party only policy in that if you were to knock into another car, your policy will cover damages to the other party’s car, but not yours. 

However, this policy will cover damages if your car were to catch fire, be vandalised, or get stolen.  

Comprehensive Car Insurance

This is the most expensive option, but also the one that gives the most coverage. In general, most comprehensive policies will at the very least cover damage to your car from accidents – whether it’s your fault or not – and also fire, theft and vandalism. The policies will also cover damage that you cause to other people’s property or injury to another person. 

Other things that are covered under a comprehensive insurance package will differ depending on the insurance company and the policy – for example, some insurance companies cover civil riots and acts of God like flooding, while others will not, or offer it only as an add-on. Also, different policies sold by the same company can offer coverage for different items such as whether a courtesy car will be provided if your car is in the workshop, or whether your personal items are also insured. 

If you take a bank loan to pay for your car, your bank may insist on comprehensive coverage to protect itself. 

Factors that affect the cost of car insurance

The cost of car insurance will vary from driver to driver based on factors such as age, gender and years of driving experience. This is because the insurance companies are trying to work out how likely a particular driver will end up in an accident and how much the insurance company will have a payout in an accident. 

Here are some things that may affect the cost of your car insurance, although these factors do not have equal weight in influencing the cost of your premium. Each insurance will give each risk factor a weighting based on the company’s own statistics and past claims information. 

  1. Gender: Although female drivers are often the subject of jokes, some insurance companies believe the opposite – that women are safer drivers, and therefore, the premiums charged to female drivers may be less than that of male drivers. 
  2. Age: It has been shown that young drivers are more reckless, easily distracted and more likely to crash when driving, so it is risky to insure this category of drivers. Elderly drivers, too, have been found to pose a higher risk because of their slower reflexes. So in Singapore, generally, people under the age of 30 and over the age of 65 can expect to pay higher premiums.
  3. Occupation: Sometimes insurance companies look at your occupation to gauge how often your car will be on the road. The more your car is on the road, the higher the chances of an accident, so if you hold a job that requires a lot of travelling, such as in sales, you may be charged higher rates than those who work from home. 
  4. Car usage: Likewise, the less you drive, the lower the premium because the chances of getting into an accident are lowered. Some insurance companies give a discount for cars with low mileage or off-peak cars.    
  5. Driving experience: Besides considering your age, insurance companies also look at the number of years you have been driving, which they take as a gauge for how experienced you are. Generally, new drivers will be charged a higher premium.
  6. Marital status: Some insurance companies believe that being married means you are a more responsible person, and therefore a more careful driver, so your premiums may be lower.  
  7. Make and model of car: Continental cars, luxury cars and SUVs will cost more to insure because it will cost more to repair them. Also, policies covering cars with higher engine capacities tend to cost more.  
  8. Age of car: Newer cars attract higher premiums and then premiums will start dropping as your car ages, but only up to a point. If your car is older than 10 years old, premiums start going up again because it costs more to replace parts for their parts. 
  9. Claims history: When you take up a new insurance policy, the number of claims that you have made in the past with this particular company as well as other providers will be taken into account when working out your premium. Obviously, the more claims you have made, the higher your premiums will be.
  10. Driving history: Any previous driving convictions and demerit points may affect your premium.

Car Insurance: A must have for every Singaporean driver

Owning a car in Singapore is a costly affair so it would make sense to take out an insurance policy to cover that precious asset of yours.  

There is no one size fits all approach to car insurance. Driving with an insured car gives you peace of mind but make sure you take your time to figure out the best deal and coverage to suit your needs.

This article was first published on GoBear’s car insurance guide, but is adapted for The Wedding Vow readers.

All opinions remain writer’s own. For more information, kindly refer to our copyright & disclosure policy.

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