Secrets Of How Your Car Insurance Is Calculated

By providing different details about you can affect the cost of your motor insurance. Below are some of the common ones and every question an insurance company asks will have some effect on your premium – after all, that’s why they ask them. Answering these questions over and over again can be really frustrating, therefore, we will do the comparison for you with multiple companies to save you the hassle yet getting the most competitive premium.

Factors that affect the price you pay
The Price of the Car. For example, the more expensive a car is, the more it costs to replace, and also the more attractive it is to thieves. Each vehicle is also categorised into a car insurance group by the Insurance Group Rating Panel, based on a number of different factors including the cost to repair the vehicle, safety ratings and maximum speed. These groups range from eg. 1 (the cheapest to insure) up to 50 (the most expensive to insure), and form a base around which car insurance Singapore companies build your quote.

Age and Experience: If you’re a newly qualified driver, under the age of 25, or both, you are deemed to be of a higher risk than other motorists by insurance companies, and as such you will have to pay more for the same cover. The younger and therefore less experienced you are, the more you should expect to pay; this also applies to any policies you are added to as a named driver.

No-claims history: It’s simple: the less you cost your insurance company, the less they charge you. Most companies will give you a discount for every year you don’t make a claim, usually up to a maximum of 50% – and this is transferrable across insures as well if you decide to switch.

Occupation: Your profession can alter the cost of your car insurance as well; for example a teacher will generally find cover to be cheaper than a taxi driver as the insurance company makes an assumption based on previous statistics as to how well that person will drive. Journalists, for example, will struggle to get cheap car insurance as it is assumed that their driving style will not be as safe as others.

Excess: This is how much your car insurance provider will expect you to pay before they will contribute to your repair bill. As a rule, the more money you’re prepared to stump up yourself, the lower your premium – although there is a ‘tipping point’ where increasing your excess will not affect the premium.
Engine type: Insurance companies will charge a much higher premium if your car is consider High Performance or Turbo charged engine.

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How To Deal With A Rejected Car Insurance Claim

Car Insurance Singapore companies have the rights to refute your claims if they find that there is something amiss. They may downsize or even refuse to pay the claim amount filed with them.

For example, if your claim is regarding a vehicle, or property within a vehicle, being stolen and the insurers have reason to believe that you were at fault (for example by leaving the car unlocked overnight), you may struggle to successfully get a payout from them.

This is where making sure all details given during the application stage pays off. If the insurer believes that your claim is being made as a result of the car being used or kept in a way not declared in the application (such as using your car for business purposes whilst only claiming domestic cover), they may reject the claim – this is why lying on your application in order to obtain cheaper motor insurance can be a false economy.

This also applies to the claim itself; do not be tempted to lie about what happened in order to claim a little more out of the company – but this works both ways. Make sure you can prove ownership of anything that may be stolen from the vehicle, as if you cannot prove you owned that iPhone or laptop, your insurer is far less likely to pay for it.

If you drive a classic car and do not have an agreed value set with your insurer, you may lose money as the company may simply consider the market value of the vehicle itself, not its worth as a restoration project.

As discussed previously, all policies are held in “utmost good faith”, meaning that it is your responsibility to make sure that all information your car insurance has on you and your vehicle is correct and up-to-date, and that you inform them of any changes that may be important without being prompted. Insurance companies assume all information on file is true, and will only investigate in the event of a claim.

What if I am not happy with my claim result?
You are perfectly within your rights to dispute a claim being rejected or downsized by your insurer. There are a number of reasons you might want to do so, and we will tell you how to go about doing that shortly.

There are a number of reasons people may dispute a claim, including a difference in interpretation of small print and policy guidelines or a disagreement on the value of a claimed for item.

Inform your insurer that you wish to dispute the claim; although unless you have additional evidence or can make an effective claim with regards to a difference in interpretation you may find this is not particularly helpful – although you can haggle with insurers with regards to item values.

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Find cheaper car insurance with our money-saving tips

Car insurance Singapore premium is getting higher and insurer is not showing much sign to bring down the premium due to escalating claims.
However, there are several ways that you can cut your motor insurance costs, so take note of our simple tips and you may save yourself some money.

Check your cover
There are generally three types of cover provided by motor insurers; Comprehensive, Third Party, Fire & Theft and Third Party.

Each policy differs in the level of cover offered, Third Party being the most basic and Fully Comprehensive being the most complete and the level of cover can be reflected in the price so try to work out which policy is best suited to your needs when comparing prices.

However, you need to take note of your current finance company if they will allow you to take up other coverage type than Comprehensive. Most Finance companies will not allow that because if accident happens, only Comprehensive coverage will pay for own damage claims while the 2 other coverage will not be able to do so.

Alter your voluntary excess
The general rule of thumb with voluntary excess is that the more you are willing to pay up front when making a claim, the lower the premium, so you may well be able to save money by increasing the excess on your policy.
But, again, be sure to compare policies with varying levels of voluntary excess as our research has shown that the savings are nominal once you reach a certain level of voluntary excess.

Minimise optional extras
Insurers will offer a series of optional covers such as Courtesy cars, going back to Dealer workshop for accident repairs but these all come at a cost. So work out which, if any, extra benefits you need on your policy and take off the ones that you don’t as this will help lower the price of your premium.

Named Drivers
This benefit usually cost more to have and most insurers will still cover unnamed driver with the condition of additional excess. If the unnamed driver seldom drive your car, you should consider not to put her/his name in to save the cost.

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Car Insurance Jargon Buster

Motor insurance, just like any other financial product, has its fair share of arbitrary terms and oblique jargon that means nothing to people who don’t work in the industry every day.

Below will be some of the common jargons that will be good to understand.

Authorised Workshop – insurers will often prefer for any repair work to be done by workshop they know and trust: – these are known as Authorised Workshops.

Comprehensive – this is the most complete type of cover you can currently purchase. It covers own damge, third party claims, fire and theft.

Fault/no-fault claim – a no fault claim refers to a case where you are not at fault, and as such your insurer can claim costs back from a third party. A fault claim is slightly different however, as a fault claim refers to any case where the company cannot claim expenses back – in the case of someone driving without insurance, for example.

Indemnity – refers to a payment made to the policyholder that ensures they are in the same financial situation after an incident as they were directly beforehand.

Loss adjuster – a loss adjuster is a person who investigates claims, ensuring that they are legitimate and that the company they work for are not paying over the odds on claims.

Material fact – failure to disclose material that could invalidate a policy, such as driving convictions.

Social & Pleasure – If you only plan on driving your car for non-work purposes, this is the sort of cover you need. If you drive a car to work and back, you will need to add commuting to that, and if your job involves driving you will have to include that as well.

Settlement – a settlement refers to a claim being paid and completed; quite often, the payment from your insurer is referred to as a settlement.

TPFT – Third party, fire and theft. This type of cover insures you against fire and theft to your own vehicle, and damage to third parties.

TPO – Third Party Only. This is the absolute minimum cover you should legally have while on the road. This covers you for damage to other people’s property as well as personal injury claims, and nothing else.

Underwriter – an underwriter works within an insurance company, and decides whether or not the insurer is willing to accept the risk a policy presents. If this is the case, the underwriter then decides how much to charge the policyholder for accepting this risk.

Under-insurance – insuring your car for less than it is worth is known as under-insuring. This is particularly important when it comes to making a claim, as even if your claim does not cover the total value of the car, insurers can refuse to pay the percentage difference between the insured amount and the actual value. For example, if your car was worth $100,000 and insured it for $80,000, your insurer may refuse to pay 20% of any claim.

ULR cover – uninsured loss recovery, more commonly known as legal expenses cover. Basically, this means that you can recover any money spent on legal expenses should your incident lead to court.

Uninsured losses – items not covered by your car insurance Singapore. These include things like hire charges and legal costs.

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Car Insurance For New Drivers

Your first motor insurance policy is likely to be expensive in regardless of how old you pass your license. Car insurance Singapore is compulsory – as cover is not optional – there are steps new drivers can take to find the cheapest possible car insurance.
A great place to start is with us to help you to compare new driver insurance quotes from different insurance companies.

What should a new driver look for in an insurance policy?
Whilst getting the cheapest possible price for your motor insurance is important, ensuring you get the most appropriate cover as a new driver is equally important.

In the event of making a claim, you need to rely on your insurer, therefore, choosing an insurer you can trust to give you an efficient service is important. It should help you to manage your claims so that it will not escalate in the claim amount

Finding The Right Level Of Cover For You
Assess carefully for the policy options available to you so that it will be smooth sailing should you make a claim later on.
There are three key elements to consider when buying car insurance for a new driver:
Type of cover – You need to decide on either Third Party only, Third Party Fire and Theft or Comprehensive cover. Each provides a different level of cover, so it is important you choose the most suitable.
Policy features – Some policies offer a courtesy car if yours is off the road following an accident, others offer no claims discount protection or zero excess. You should look beyond what the policy costs and think about what you get for the price.
Policy extras – Additional and optional features like breakdown and zero excess for windscreen will vary from policy to policy, think about what you are likely to need before you commit.

How New Drivers Can Find Cheap Car Insurance
There are many different ways to find have a lower premim, eg.
  1. Choosing a car with a smaller engine, which will be seen as less of a risk by insurers, will help to keep costs down.
  2. Fitting provider-approved security equipment like an immobiliser or alarm will have an effect on your premium, as well as parking in a secure location overnight.
  3. Driving safely and avoiding driving convictions will keep your license clean and build up your no-claims discount, making your policy cheaper in the future.
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Car Insurance Companies in Singapore

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Where Does My Car Insurance Money Go?

Being a Young and Inexperience car owner, car insurance Singapore can be an expensive purchase. It will be worse if a claims occurs. It will be interesting to know what happens to the money you spend on your increasing premium?

How your car insurance company spends your money
The premiums you pay to your insurer are not simply held to one side in the event that you need to claim on them; instead, it all goes into one lump sum which the company uses in several different ways. Approximately 50% the pot is taken up by paying out on claims, and the other half is split equally between administrative and legal costs and the general day-to-day running of the business.

These numbers vary depending on the insurer; some companies keep their overheads lower, or save more money on premiums each month, but that is roughly how the money is split.

What sort of claims cost car insurance companies the most?
Damage to cars involved in collisions make up around half of an insurance company’s expenses, and a huge amount of money is also spent on medical expenses and personal injury claims (the costs of which are ever increasing). This is why fully comprehensive cover is so expensive – people who hold these policies can cost insurers a great deal if they have an at-fault accident.

Insurers also spend a great deal of money processing and settling claims – there are legal costs involved in doing so, and disputed claims can take a long time to settle. Insurers also have other staff to pay, advertising to produce, and physical properties to maintain.

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No Claims Discount for Car Insurance

One of the best ways to make significant savings on your motor insurance premium is to build up a number of years’ worth of No Claims Discount due to claims free with the insurance companies.

How no claims discounts reduce premium prices?
One factor that car insurance Singapore companies base the price of their premiums on is the level of risk associated with each particular driver, so drivers that are perceived as being a ‘lower risk’ will pay less for their car insurance than drivers that are judged to be a ‘higher risk’.
As far as insurers are concerned, the best barometer of risk is the number of years that a motorist has been driving without making a claim on their car insurance and so a no claims bonus is awarded for each year of claim-free driving by 10% each year of no claim till a cap to 50%.
As these discounts can be accumulated and are calculated as a percentage of your premium, they can make a massive difference to the cost of your car insurance.

How are no claims discounts calculated?
The way in which no claims discount is calculated often varies from insurer to insurer but, as a general rule, you can expect to earn a 10 per cent discount after one year of claim-free driving; a 20 per cent discount after two years; 30 per cent after three years and up to 50 per cent after five years.
No claims discounts are granted on all types of policy so, even if you have third party cover, you are still eligible for no claims discounts for each year of you don’t claim on your policy.
* Take note that for commercial vehicle the maximum no claim discount will be 20%.

Ways to build your no claims discount
The only way to build your no claims discount is to not make any claims on your insurance. As explained above, the more years you go without making a claim, the greater your discount will be.

Ways to lose your no claims discount
The most obvious way to lose your no claims discount is to have a claim made on your insurance because you have been at fault for an accident.
But it’s important to note that your discount can be lost even if you are not at fault for an accident and the thing to remember is that it is a no claims discount and not a no fault discount. So, for example, if you are hit by an uninsured driver, have to claim on your policy and your insurance company cannot recover the costs from another party then this will count against you and could mean that you lose all or part of your no claims discount.
It is best to seek your agent or insurance company for advise if claims occurs so that your loss will be kept to the minimum and prevent the loss of No Claim Discount that you have accumulated over the years.

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Motor Accident Claim

What do I do if I am involved in an accident?
  1. Stay cool and don’t panic. If no injury is involved, do drive your vehicle to the side of the road or somewhere safe.
    • The registration numbers (number plates) of all other vehicles involved
    • The names, NRIC number, address and telephone number of the other driver(s)/owner(s) and any witness
    • The name of insurance company/companies for the other driver(s)


  2. Be sure to take note of the essential details before filing an accident reporting at the IDAC (reporting centre) or (Authorised Workshops for accident reporting)
    • Do not accept any offer by roadside touts offering free tow-truck services and referral to unauthorised workshops with free use of rental cars. They may compromise your claim or defence to a claim.
    • [Take 5-6 photographs of the damaged vehicles with your digital or mobile phone camera, including the accident scene, like the road, the surroundings, and the position of the vehicles before they were moved]
    • Avoid discussing liability with others involved in the accident, or their lawyers. Refer all communications from them to your insurance company.

    If an accident involves injuries, do not shift the car, call the police immediately. You must also make a police report within 24 hours of an accident involving
    • Damage to a government vehicle or property
    • A foreign vehicle
    • A pedestrian or cyclist
    • A hit-and-run party
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More Ways To Pay Less For Your Car Insurance

There are a number of other alternative you can undertake to reduce the cost of your car insurance. It is important to know what can be taken away and should maintain to cater to your needs. What apply to others might not apply to you.

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More tips to save money on your car insurance Singapore.

Marital Status: Single men pay more for their car insurance than Married man. Insurers done a research and shows that Married man have a lower claim ratio, therefore they are more willing to charge a lower for their motor insurance.

Vehicle Security: the more secure your vehicle, the less likely it is to be stolen, and the less likely your insurer is to have to process a claim. As such, car insurance companies will reward you for fitting things like an alarm and immobiliser if your car does not already have them. Check with your company to see what will decrease your premium the most, as some security fittings can be quite expensive – you want to make sure the outlay is countered by the saving on your cover.

Driving behaviour: being caught speeding or committing other traffic offenses can increase the cost of your car insurance, or even jeopardise your chances of obtaining cover at all. The closer to the letter of the law you drive, the better – both financially and in terms of safety for yourself and others.

Modifications: if you modify your car in any way, you should tell your insurer. Performance or style modifications will always increase your premium – if you are searching for cheap car insurance you should keep any changes to a minimum.

Main Driver
: if a car in the house is shared equally, but one driver has significantly more experience or fewer penalty points, naming them as the main driver (with you as a named driver) can save you money on your car insurance.

Safe Driver Discount: You will be entitled to 5% discount given by Traffic Police if you did not make any traffic offence for the last 3 years based on 30%  and above No Claim Discount.

Sell your car at the right time: Let’s assume that you brought the insurance in December and intend to sell your car next year October. In insurance context, you need to fulfil 1 year to enjoy your 10% entitlement of No Claim Discount (NCD). Therefore, it will be more advisable to sell your car in December to enjoy the  entitlement. However, if you enjoy 50% NCD (which is the maximum that insurer can give), it does not matter when you want to sell you car.

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