Why Raising the Excess on Your Car Insurance Can Cost You


No one blames you for wanting to save every dollar possible when it comes to your car. After all, buying a brand new car easily costs over S$100,000 – and that’s not even counting operating expenses such as petrol, maintenance and auto insurance.

Speaking of auto insurance – it happens to be one of the few car-related expenses you can adjust to save money. And of all the different ways to lower your auto insurance premium, raising the excess is the fastest way to reduce your auto insurance substantially.

But before you decide to raise your policy’s excess to the max to save yourself a few hundreds, you might want to consider how such a move can end up costing you thousands.

What is your car insurance policy’s “excess”?

In short, your auto insurance policy’s excess is the amount of money you must pay your insurer before it will cover the rest of your insurance claim.

For example, if your policy’s excess is S$500 and you get involved in a minor accident that causes S$2,000 worth of damage to your vehicle, you’d have to pay your insurer S$500 before it would cover the remaining S$1,500 on your insurance claim.

Your auto insurance policy’s excess is pretty important because it has a direct effect on the cost of your premiums. Essentially when your excess is increased it saves insurers from having to pay out numerous small claims.

So when you think about your auto insurance policy’s excess, think about these two points:

  • Higher excess (e.g. S$2,000): You pay a lower premium because you typically bear most of the cost of an accident claim.
  • Lower excess (e.g. S$200): You pay a higher premium because your insurer typically bears most of the cost of an accident claim

On average, most insurers offer excess amounts ranging from about S$100 to S$3,000.

Why adjusting your policy’s excess can cost you

The easiest way to illustrate just how dangerous it can be to raise your auto insurance policy’s excess to the max is to give an example of the cost difference when it comes to filing a claim.

Here’s an example of two drivers on both ends of the excess spectrum:


As you can see, saving a few hundred dollars on your annual auto insurance premiums works out well – if you’re not involved in an accident.

Types of drivers who shouldn’t adjust their policy’s excess

Driving in Singapore isn’t as crazy as Jakarta or Bangkok – but it can still get quite congested during rush hour. And the truth is, there are some types of drivers out there who shouldn’t risk raising their policy’s excess.

Those drivers include the following:

  • Anyone who just received their licence and are under 26 years of age (due to driving inexperience).*
  • Anyone over the age of 60 (due to the likelihood of health issues such as mobility and vision impairment).
  • Anyone who travels during rush hour daily (due to high instance of “bumper-to-bumper” traffic and congestion) .
  • Anyone who works in 12-hour shifts (due to the reality that fatigue is a contributing factor in many accidents).
  • Anyone driving more than 50km daily (due to the likelihood that drivers who commute most of the day are at greater risk for getting into an accident).

*Do note that many insurers require young and inexperienced drivers to carry an excess of S$2,500 to S$3,000.

If you’re an incredibly safe driver who doesn’t fit into the above categories and have already established an emergency fund to cover contingencies (like having a car accident) – then you’re in a better position to adjust your premiums for added savings.

But if you’re not, it’s probably safer to make no more than a minimal adjustment in your car insurance policy’s excess if you really need to save money.

Of course, there are other ways to save money on your car insurance policy that don’t involve having an insanely high excess that’ll leave you broke in the event you get into an accident. Saving money can be a matter of switching insurers.

Just visit our Auto Insurance Comparison Page to find a policy that’s not only more affordable, but provides just the right amount of coverage too.

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