3 Ways to Lower Your Auto Insurance in Singapore
Singapore is a ridiculously expensive country to live in, especially when it comes to car ownership. For the price of a brand new 2015 Hyundai Sonata (S$150,000), you can buy about six of the same model… or even a house in the United States!
Then again, thanks to the Certificate of Entitlement (COE), Additional Registration Fee (ARF) and numerous other taxes and fees – most Singaporeans have no choice but to take out a car loan to purchase one.
But owning a car doesn’t need to be any more expensive than it already is – because there are ways to save hundreds or even thousands of dollars on your auto insurance.
Here are 5 ways you can save some major cash on your auto insurance policy in Singapore:
#1: Earn your No Claims Discount (NCD) by driving safe
Being a safe driver is the best way to earn the largest discount offered by insurers – the No Claims Discount (NCD), which can reduce your auto insurance premiums by as much as 50%
Earning the NCD takes time, as every year you drive without an own damage (OD) claim will earn you a 10% discount upon policy renewal, which increases by another 10% every year you stay OD claim free – up to a maximum of 50%.
Here’s a look at how much you’ll save on your auto insurance premiums by driving accident free over a period of several years:
Keep in mind that if you get into an accident, your NCD discount will be reduced. However, you should check with your insurer about its policy on NCD reduction as it varies with different insurers and policies.
Note: Many insurers offer NCD Protection, which will safeguards your well-earned NCD discount in the event you get into an accident. It will even protect your discount from dropping dramatically if you get into two accidents in the same year (e.g. your NCD protector keeps your NCD at 40% on the first accident and it only drops to 30% on the second accident).
#2: Don’t accumulate demerit points
Insurers aren’t the only ones who will reward you for driving safely – the Sing
apore Police Force (SPF) will also reward you with a certificate of merit (COM) for three continuous years of safe driving without an OD claim. Most insurers recognise the COM and will give you a 5% on your auto insurance policy.
But there are ways to ruin such a discount. It might be tempting to speed up because you’re late for work while calling your office on your mobile phone to say you’ll be late. If you get busted – you’ll not only lose any chance of earning a COM, you’ll also earn some major demerit points on your license!
Here are some of the traffic violations that’ll pretty much ensure you’ll never get the COM discount on your insurance (in fact, you’ll be prosecute in court):
- Driving recklessly and dangerously (24 demerit points)
- Exceeding the speed limit for a road/vehicle by more than 60km/hour (24 demerit points)
- Using your mobile phone while driving (12 demerit points)
- Failing to heed traffic lights (12 demerit points)
While driving without demerit points can save you money on your auto insurance premiums, having a driving record riddled with demerits makes insurers nervous – and when they’re nervous, they charge higher premiums.
Note: According to the Singapore Police Force (SPF), it only takes 13 demerit points for a new driver (during probationary period) and 24 points during a 24-month period to have their license suspended for 12 weeks. And there’s no bigger waste of money for a car owner than paying for a vehicle you can’t use!
#3: Adjust the excess on your auto insurance premiums
In short, your auto insurance policy’s excess is simply the amount of money you must pay your insurer before you can receive the full amount of your claim. It also has a direct impact on your auto insurance premiums, as the higher your excess amount is (e.g. S$1,500), the cheaper your premiums will be, and vice versa.
Having a high excess means taking on more financial risk in the event of an accident – meaning you’ll need to pay more out of pocket if you make an accident claim with your insurer.
Understanding your auto insurance policy’s excess can be a bit tricky, but here’s a little example of how it affects your claims in the event of an accident.
Let’s say you currently have an excess of S$1,000 on your auto insurance policy.
While driving to work one day, you took your eyes off the road for a split second to turn off the annoying song playing on the radio.
In that split second, the car in front of you came to a sudden stop and you had a minor collision with it.
After the damages were calculated to your vehicle, it came up to S$3,500.
With an excess of S$1,000, you’d need to pay S$1,000 to your insurer before it would pay for the remaining S$2,500 on the S$3,500 accident claim.
But… if you went for a higher excess of say, S$2,500 – you’d have to pay S$2,500 out of pocket to your insurer before it would cover the remaining S$1,000 on that same S$3,500 claim. So beware!
That’s not to say you shouldn’t adjust your excess to save money on your auto insurance policy. Just make sure you’re prudent about it. After all, if you’re a driver with a fantastic safety record, it might be worth going for higher excess.
Another way to save money on your car insurance policy instantly is by comparing the coverage and premiums of every major auto insurer out there. Thankfully, you don’t have to waste a lot of time making phone calls and visiting different websites.
All you have to do is visit an online auto insurance comparison site like iMoney.sg to swiftly compare policies from the comfort of your home.