Finding the right car insurance plan can be like playing Pin the Tail on the Donkey…but after six margaritas and a double blindfold. Before we even get started, let’s point out the obvious. You must go out of your way to pay attention to the small details. This means reading the fine print, and having all the right questions answered – Or you could just read this article! This is your money, and you’ll need it when your mechanic starts smiling.
1. What am I Paying for?
How much you pay for the insurance plan depends on things like your driving record, your car model, your insurance history, etc. Don’t just look for the lowest premiums – It’s not true that the cheapest plans are the most value for money. And it’s also not true that the most expensive plans offer you the best coverage. Take some time to go through exactly what is covered in the policies you find attractive. Often it makes sense to pay a couple of bucks more for better protection. Plus there are a couple of policy add-ons you should consider…but we’ll talk about that in a minute.
2. Restrictions on the Driver
You may be a good driver, but your insurer doesn’t know if your spouse/children/drinking buddy is. If any of the aforementioned are fans of the Fast & Furious film franchise, you’d best be sure your car insurance policy covers them too.
When you sign the contract, you are the default named driver. In other words, figures like the excess (see number 5) pertain to you. Those figures change if an unnamed driver wrecks your car. So you may pay an excess of $200 if you wreck the car, but if your brother removes a lamp post with it, the excess might be $1,200 instead.
You can add other drivers under your policy, but this will result in premiums going up. The more drivers you name under the policy, the more expensive it gets. But it may well be worth it. Besides, some insurers allow you to add a certain number of named drivers for free so be sure to give that a check if someone other than you drives the car often.
3. What extra cover can you buy?
You may be able to buy protection from things besides road accidents. This will certainly come in handy when you insist on parking in that dubious alleyway, and come back to find someone’s scratched a Hokkien vulgarity into your car door – On a side note, if by any chance it’s that loan shark you owe money to, it’s time you got yourself a good credit card.
A fairly decent array of side-dishes can be purchased alongside your extra-value car insurance meal. The most common ones are:
- NCD Protector: A No Claim Discount (NCD) protector does exactly what its name implies. If you do, within your policy year find yourself in a bit of a fender-bender and make a claim, your existing NCD will come out of it unscathed. Otherwise, without the NCD Protector your NCD gets deducted by 30% each time you make a claim. Protectors generally only apply to the first claim within a year though.
- Car Rental Extension: If your policy does not already come with a courtesy car, it’s often included as an add-on. A rental car is generally offered if your repairs exceed 3 days.
- Additional Personal Accident Cover: Motor insurance policies do come with personal accident coverage but selected insurers allow you to increase the amounts covered for a nominal fee.
4. Make sure your bank approves.
If you’ve bought the car on a bank loan, you may be facing other requirements. Some banks won’t allow you to buy TPO (Third Party Only) car insurance. This is the cheapest insurance you can find: they only pay for damages to the driver whose car you just scrapped.
Your bank may insist you get comprehensive coverage instead, because they don’t want to repossess a Honda wrapped around a tree.
5. The Excess
When you make a claim, the amount you have to pay is referred to as the excess. The rest of the cost is borne by your insurer. For example:
Ryan is coasting down the freeway, head banging to a Linkin Park album when a tree jumps in his path. He slams into it, and the cost to fix it is $1,000. His excess is $200. So he just pays $200, and the insurer forks out the remaining $800.
It’s also one of the few times Ryan got to use the phrase “my excess cash”.
6. Damage Assessment
Sadly, my assessment that my last collision resulted in “total demolition” wasn’t acceptable to my insurer. I had to take my car to an IDAC (Independent Damage Assessment Centre), where after the inspector stopped laughing, he defined the damage as “a small dent in the front bumper”.
Depending on your insurer, there are restrictions on where you can have your car’s damage assessed. Make a note of these.
7. Repair Restrictions
Insurers may insist you go only to specified workshops. Likewise, they may be finicky about who repairs the car, and what parts the mechanics can use. If I decide to get my car patched at Uncle Quek’s Discount Car Repair and DVD Rental, I may be foregoing my claim.
Before sending your car to a workshop, check if your insurer has any restrictions.
8. No Claim Discount
The NCD (No Claim Discount) is a discount to your premium. You get this in increments of 10% when you don’t file any claims for the year, and it accumulates for each year without a claim.
So you get 10% off for one year without claims, 20% for two years, etc. to a maximum of 50% after 5 years. If you somehow manage to get to 60%, you should probably quit your day job and open a driving school.
If there is a change in the car’s ownership, you might lose your NCD. Most insurers in Singapore will allow you to retain your NCD for up to 24 months. However, don’t assume this is always the case.
9. Proper Procedures
I have a booklet on my insurer’s claim procedures. It’s about as accessible as a third year course in Greek poetry, so I just call the experts and ask instead.
When making a claim, it’s easy to miss out on the full amount because the process is complicated. Don’t just read the instructions off the site or the booklet. Always call directly to double-check. If you find the procedures too difficult from the outset, consider another insurer.
10. Refunds and Penalties
Let’s say you’ve made a dire mistake, and brought your car to JB for some unsubtle modifications. As a result, your car now resembles a cruise missile more than a sedan. Or maybe you’ve made one too many claims for your insurer’s liking.
Your insurer might frown on all this, and decide to cancel your policy.
In such cases, you might be entitled to a refund. If you’ve made even one claim though, you may have just lost your right to it. So check carefully, and don’t gloss over this part of the contract.
Likewise, you may decide to get rid of the car and cancel the policy, before the expiry date. If that happens, you might end up paying the insurers a penalty.
11. Finding the Right Insurance
The right car insurance isn’t just about the lowest premiums. If you aren’t properly covered for an accident, cheap insurance is worse than no insurance. You’d have been paying those premiums for nothing!
To find an insurer that meets your needs, drop by MoneySmart. Just enter your car details, and this website will automatically pick the best insurers for your needs. In five minutes, you’ll be able to compare premiums and coverage between the most appropriate insurance companies. There’s even an insurance expert on hand, should you need any advice.
Research by: Shubhreet Kaur
Drivers out there, any other tips to share? Share them with other readers in the comments below.