Getting a car in Singapore is a bit like having a fancy dinner. No matter how much you’re mentally prepared to spend money, when you see prices on the menu you’re still a little shocked at how much you must pay. That’s usually when your eyes scan for the cheapest thing on the menu and you order that, hoping no one questions your decision. In Singapore, we’re a little like that when it comes to car insurance. After all, when you’ve just spent so much on the vehicle itself, just getting the cheapest car insurance should be fine, right? Well, we’ll see…
But first, we need to define our driver…
The cheapest car insurance policy premiums differ based on several factors like age, driving experience and car model. In getting quotes from insurance providers, we gave them the following driver profile:
27 year old male
Married
5 years driving experience
no prior claims, No-Claim Discount of 50%
drives a 2-year-old Toyota Corolla Altis 1.6 with no mods
Wondering why we picked this profile? Because this is what most insurance companies would consider a “safe” driver in Singapore, and thus be quoted the lowest premiums. That said, you may be surprised to find out that some insurance companies consider women “safer” drivers than men.
Note that we searched for comprehensive car insurance plans only. If you opt for third party only (TPO) or third party, fire & theft (TPFT) your premium will definitely be cheaper.
But first, we need to define our driver…
The cheapest car insurance policy premiums differ based on several factors like age, driving experience and car model. In getting quotes from insurance providers, we gave them the following driver profile:
27 year old male
Married
5 years driving experience
no prior claims, No-Claim Discount of 50%
drives a 2-year-old Toyota Corolla Altis 1.6 with no mods
Wondering why we picked this profile? Because this is what most insurance companies would consider a “safe” driver in Singapore, and thus be quoted the lowest premiums. That said, you may be surprised to find out that some insurance companies consider women “safer” drivers than men.
Note that we searched for comprehensive car insurance plans only. If you opt for third party only (TPO) or third party, fire & theft (TPFT) your premium will definitely be cheaper.
And here are the cheapest car insurance premiums we found:
*Note: we left out China Taiping, QBE, Ergo and AIG as they have no online quotation system. Also, we did not include AXA as we were quoted >$2,000 for a SmartDrive Flexi plan.
Frankly, I was surprised by some of the results. When I ran this same price check on the cheapest car insurance premiums last year, FWD and DirectAsia were among the top 3 cheapest insurers offering plans (for the same specs) well under $1,000. Clearly they’re facing some stiff competition now.
MSIG and Sompo, on the other hand, are not known for having the cheapest car insurance. Yet this time, their quoted premiums are among the most affordable. Why? Perhaps it’s because of the car make and model. You will probably get an entirely different story if you’re looking for quotes for a continental car instead.
Your driver profile also matters. In this case, our profile is a paragon of virtue, the Platonic ideal of every insurer’s favourite driver. Deviate from this ideal, and your quoted premium might be entirely different too.
Here’s the thing though – just because a company can quote you a low annual premium for your car insurance policy doesn’t mean you should go with it. There’s no point saving on your premium, only to end up paying more over time.
Here’s why cheapest premium isn’t always best:
1. The higher your excess, the lower your premium
When you make a car insurance claim, the excess amount is basically what you must cough up first before your insurance provider pays the rest. If your claims are $500 and your excess is $500, as in the case of FWD Singapore above, too bad, you’re going to have to pay the full claim out of your own pocket. There’s nothing wrong with going for a higher excess if you’re generally a safe driver – but say a short prayer before hitting that ignition button that you’ll stay incident-free on the roads.
Fortunately, many insurance companies allow you to customise your car insurance plan. This means you can choose to lower or increase your excess, which then leads to a higher or lower premium respectively. You can also choose to add or remove additional benefits to save on premiums.
2. Your No-Claim Discount is your saviour for cheapest car insurance
Can you imagine having to pay double your car insurance premiums? That’s a reality for someone who unfortunately makes one too many claims in a year after painstakingly building up their No-Claim Discount to 50%.
But the fact is, most insurers offer you what is known as an NCD Protector, which you typically pay a bit more for, but allows you make one claim before reducing your NCD. Without this add-on, your NCD might drop by 30% if you make a claim. (Although certain insurers, like Aviva, penalise only 10%.)
Of course, NCD is only one side of the story. There’s always the question of how much your quoted premium will be come renewal time. Many drivers get hit with higher premiums upon renewal even if their NCD has gone up. If that’s what’s happening, it’s definitely time to shop around for another insurer who wants your business.
3. Always, always read the fine print
No two car insurance policies are exactly alike and it’s important to make sure you understand where they differ. Yes, for the most part the coverage is comparable, but sometimes insurers like to play around with definitions. For example, one would think that modifying your vehicle is okay, if it’s an LTA-approved modification, right? Wrong.
It’s not like you’re outfitting your vehicle with booster rockets – you’re just changing the rims of your tyres because you like the design. According to some insurance companies, that’s as good as turning your car into an extra on the Fast and the Furious film franchise.
These insurance companies take their fine print very seriously – so when they say modifications may void your policy, you better ask them what they mean by modifications.
SOURCE : blog.moneysmart.sg