Car insurance: it’s mandatory. I don’t know why they print brochures with people holding up car keys, spouting phrases like “love your ride” or “smooth drive”. As if they need to convince me or something. That brochure could feature a grinning banker lighting his cigar with a $50 bill and it would make zero difference. I’d still have to buy it. So let’s explore the available options: what’s the difference between these insurance plans?
Did I Mention It’s Mandatory?
As with most countries, you can’t drive in Singapore without some form of car insurance. At the very least, you need an insurance policy that covers other parties. So if your three point turn becomes a 9 (demerit) point accident, the other driver won’t have to replace his windshield with Saran wrap.
There are three main types of car insurance policies:
1. Third Party Only
In an accident, Third Party Only (TPO) insurance covers the other guy. In other words, the insurance pays for other people’s damages when you cause them. For example:
I have TPO insurance. I’m driving down the road when suddenly, the driver in the adjacent car blasts Rebecca Black. I am so distracted that I accidentally swerve, and ram straight into his bright pink car. This takes off his rear bumper, and my front bumper. When the claims are made, the insurer will pay for his rear bumper, but not my front bumper.
If you have TPO insurance, it’s only paid out once they prove it’s your fault. TPO is also the cheapest type of insurance plan.
2. Third Party, Fire, and Theft
This insurance plan works both ways. It doesn’t just cover the third party, it also covers your own damages. In addition to injury and death, this insurance plan also covers vandalism, fire, and theft. If someone steals your car, you get money. If someone sets fire to your car, you get money. If someone steals and sets fire to your car, the thief is an idiot. And you still get money.
3. Comprehensive Coverage
Comprehensive coverage has the broadest scope. This insurance plan is the most common one in Singapore, not least because many car loans require it. This plan covers you for death or injury to other parties, damage to other parties’ property, fire, theft, accidents, and medical costs arising from the accident.
When you get a car loan from a bank, they may require you to get certain policies. As mentioned above, it’s usually Comprehensive Coverage. When this happens, your opinion is like a Borders Gift Card (meaningless). The bank is doing this to ensure that you can still pay back your loan, even when the car is a wreck.
The three kinds of coverage also come with extras. In exchange for nudging up the price, of course. You can include cover against:
- Windscreen damage
- Damage arising from riot, strike, or civil commotion
- Damage from flood or windstorm
- Liability of passengers for acts of negligence (e.g. drunk friends being opening champagne in the back seat)
- Personal accident benefits for passengers
- No Claim Bonus protection (You can make a set number of claims without losing your NCB)
To pick the best insurance plan, do your homework: compare varying rates and coverage. If you don’t have the time, go through free websites like MoneySmart. Just fill in your car details, and you’ll get a comprehensive list of viable insurers. SmartInsurance also employs local insurance experts, who can contact you and advise you on the lowest premiums or best coverage.
What sort of car insurance have you got and why did you choose it? Comment and let us know!