3 Types of Car Insurance Plans in Singapore: A 2023 Guide

Car accidents could happen to anyone. If you get involved in a car accident, you may go through post-accident trauma caused by the loss of income and property, bodily injury, or even the loss of family members.

Moreover, compensation for other users on the road may cause a financial burden due to the vast amount filed by others if the fault is yours.

The Singapore government requires every car owner should have an effective car insurance policy before putting his car on the road. You have a legal duty to carry an effective car insurance plan while driving.  Find out more on the cheapest car insurance in Singapore.

Besides, car insurance is necessary to protect you, your family members, and other users on the road in case an unfortunate incident happens. Read on to learn more which car insurance is right for you.

Which Car Insurance Plan Suits You?

The three types of car insurance plans are Third-Party Only; Third-Party, Fire & Theft; and Comprehensive Plan. They range from minimum third-party liability to a full range of covers like medical expenses, loss of income, property damage, and personal death or injury.

The following table gives you an easy-to-understand summary of the information you need.

Third-Party Only(TPO) – Best for Rare Car User

Third-Party Only provides the necessary and legally required car insurance. The policy pays for legal liability arising from a car accident due to your responsibility. 

You should get TPO if you: are a rare car user on the road, are a budge applicant aiming to fulfill the basic requirements by the law.

• Coverage ranges from a third party’s bodily injury and death, medical expenses, and financial loss to a third party’s property damage caused by you. The legal cost is a part of the coverage.
• Third-Party Only policy provides primary coverage required by the laws, e.g., the liability arising from personal death, injury, property damage, and legal costs due to a car accident. The insurance plan can compensate for the liability of up to S$5,000,000.
• Though the least expensive among the other two insurance plans, The TPO insurance plan provides little protection to a policy owner other than liability for third parties. Few insurers offer additional add-ons on top of the plan.

Third-Party, Fire & Theft (TPFT) – Best for Old Cars

Third-Party, Fire & Theft insurance is an insurance policy between third-Party Only and a Comprehensive Plan in terms of coverage and premiums. Besides basic coverage by TPO, TPFT covers car damage caused by fire and theft.

You should choose a TPFT if: your car is ineligible for more coverage due to old age(more than 8 years), and you may require minimum coverages beyond TPO.

• Policyowners have a broad choice of auto workshops to repair their cars. Besides, customers benefit from lower premiums if they choose workshops authorized by an insurer. 
• The policy also covers spare parts and other accessories due to theft or fire. Some policies even offer a towing fee of up to S$300 during a car breakdown. You should choose add-on insurance: NCD(No Claim Discount) Protector. 
• The NCD Protector can lower your premium amount even if you have the first claim. Another essential insurance rider is 24/7 roadside assistance offering urgent car services in situations like a car breakdown on the highway at midnight.
• TPFT holders are not accessible to crucial benefits from events like car replacement, windscreen damage, or natural disasters. These events can cause catastrophic vehicle damage or losses to car owners. The plan is an expanded TPO plan with added minimum protection.
• The coverage provided does not go beyond basic coverages like personal accident benefits, medical or other car-accident-related covers, such as income loss and transport expense indemnity.

Comprehensive Plan(CP) – Best for Frequent Drivers

Besides covering the benefits offered by the former two types of insurance, a CP offers the broadest scope of protection. A Comprehensive Plan covers the liability to personal injury and death, indemnity, and property damage due to accidents and natural disasters.

You should choose a comprehensive plan if: you are a frequent driver and opt for more protection to your family or other passengers.

• The CP is the most encompassing insurance plan in Singapore as it offers the broadest protection from accidental losses or natural disasters. Furthermore, insurance companies may offer premium discounts to comprehensive plan clients.
• The coverage for a comprehensive plan is multi-fold:
  • A plan holder can get compensation of up to a market value at the time of an accident or natural disaster.
  • You can choose a preferred repair workshop or an authorized one to reduce premium or excess.
  • Accessories like audio and video equipment are within the coverage, 4. Some insurers offer a lifetime guarantee of spare parts from authorized workshops.
• The auto insurance coverage provides “replacement value” benefits substituting a car beyond repair for a new one in equivalent value at the time of an accident. The condition for the benefit is available for a vehicle under 12 to 24 months out of a factory gate. 
• Can pay the windscreen damage in whole or with minor excess from a policyholder. Besides, you may get a towing allowance of up to S$300 if it occurs.
• Most comprehensive coverage plans offer a daily transport allowance of up to S$80 for 10 days maximum to repay your travel expenses. Or, instead, you may get a courtesy car from an insurance company as long as your car is still in a repair shop for a maximum of 10 days.
• Insurance companies include personal belongings loss subject to a maximum amount. Personal death and injury coverage offers indemnity due to accident causes. 
• Regarding medical insurance, the Comprehensive Plan provides medical coverage to named and unnamed drivers and passengers. Finally, policyholders have 24/7and ad-hoc roadside assistance for backup. 
• Policyholders should pay the excess(if any) before an insurance company writes the cheque for the remaining compensation. And an insurance company charges a higher premium for options of free choice of workshops. The higher premium also applies to coverage for young, inexperienced, and unnamed drivers.

Things to Consider Before Getting an Insurance Plan in Singapore

Besides the basic coverage required by law for an auto owner, car insurance policies offered by insurers are diverse in coverage scope. They include typical collision coverage, personal injury protection, liability insurance, specialized medical payments, and uninsured motorist coverage.

Coverages under the comprehensive car insurance plans differ among insurers. You may end up buying a car insurance policy without sufficient protection, like inadequate third-party liability coverage and lack of underinsured motorist coverage. 

You should consider the following factors in choosing a car insurance coverage appropriate to your conditions.

See Also: Best Petrol Credit Card in Singapore 2022

1. Coverage Types

You should determine the personal criteria in selecting a coverage type. Besides legally required coverage, e.g., the liability for third parties, you may see insurance products covering losses due to personal bodies, indemnity, and properties when a car accident occurs.

Of the 3 popular insurance types in the Singapore market, the primary Third-Party Only(TPO) and the Third-Party, Fire, and Theft(TPFT) are typical and standardized vehicle insurance policies covering liability for third parties’ injury and property loss and additional coverage for loss and damage of insured vehicles due to fire and theft(TPFT).

The Comprehensive policy, including coverages of the former two types, covers more broad events caused by car accidents and offers across-the-board protection to car owners, drivers, and passengers. 

2. Budget for Insurance Premiums

If the premium is your primary consideration in owning a car, choosing a minimum and statutorily required Third-party Only policy is the lowest for your bar. Besides, you may pay two or three hundred dollars a year for more protections like fire and theft insurance add-ons(TPFT). Therefore, the 2 insurance coverage types are ideal for budget car owners.

You may want to protect your family members and other passengers from unexpected events on the road. Then, a comprehensive policy can address broad coverage in case of an unfortunate event. This type of coverage may act for you and your family as a shield against catastrophic losses of income and properties. 

Premiums differ depending on insurance plans, coverages, insurance add-ons, and insurance companies.

3. Covered Workshops

Your choice of an auto workshop may increase the premium of your policy. You need a workshop when your car needs repair in an accident. If you request a choice of your preference over a workshop for service, insurance companies may add more insurance premiums to your policy due to potential costs incurred.

On the contrary, insurance companies may lure applicants into using authorized workshops by lowering premiums or offering hybrid options and rewards to motivate car policyholders to moderate premium amounts.

Generally, free choice of workshops has the highest premiums, authorized workshops for repair have the lowest premium, and a hybrid of options is in the middle price range. At times, a better way to help you pay for your car repairs would be taking out a loan. This allows you to easily cover the repair and pay for the car loan later.

4. No Claim Discount(NCD)

A No Claim Discount is a premium reduction in a percentage applying to policy renewal. An insurance company grants an NCD to a client upon the renewal date if the claims filed for the last policy year are less than specified. A policyholder may pay 30% to 50% fewer premiums for an auto policy for the following year.

An insurance company also offers an insurance add-on called a No Claim Discount Protector. The NCD protector protects against the possible reduction or cancellation of the add-on in case of a claim.

5. Insurance Excess

An insurance excess due to a claim is a compensation amount a plan holder should be responsible for; an insurance company pays the rest. A claimant requests a verified compensation of S$10,000 due to car damage in an accident. 

Your vehicle insurance policy specifies an excess of S$2,000. In this case, you should pay the first S$2,000 to the claimant, and an insurance company then pays the remaining S$8,000.

An insurance company may allow applicants to choose among excess options to adjust premiums. A policy with high insurance excess has lower premiums, while the others with low excess require higher premiums. 

In other words, a higher excess payment may outweigh the benefits of reducing premiums for a policy with a low excess when an accident occurs. You should review the ability to pay an excess with the premium budget in buying a car insurance policy.

6. Daily Transport Allowance

A daily transport allowance is a fixed amount of around S$80 per day to compensate for a transport expense. An insurance company distributes the allowance to a policyholder while an insured car is under repair due to an accident. You may consider including the insurance add-on to indemnify your travel expenses incurred during this period.

7. Roadside Assistance

It is an emergency service when your car breaks down on the road. Insurance companies provide Adhoc assistance and towing services besides the around-the-clock aid when you need it most.

New or inexperienced drivers may benefit most from the advice provided by the assistance at the time when getting confused and overwhelmed at an accident scene. You should consider the inclusion of the add-on by paying a little more premiums.

8. Young/Inexperienced Drivers

Young or inexperienced drivers aged below 27 are prone to higher premiums charged by insurance companies. Statistics show this driver class has a higher accident rate than others. The inclusion of young or inexperienced drivers may increase a policy premium.

But the premiums for a vehicle policy may lower if few claims arise or a No Claim Discount has increased for the previous policy year.

Besides, this group pays a higher excess than others for a claim. If you or your family member belongs to the group, you may have to pay higher premiums.

Other Important Things You Need to Know

1. What Should I Do When My Auto Policy is near Expiry?

You should review whether your current situation related to your car is the same as last year. One or more factors may weigh more importance than the others the last time. The 8 elements mentioned above for consideration play a crucial role in your new car insurance policy.

Besides comparing policy premiums offered by insurance companies, you should use the No Claim discount(NCD) to lower your premium when renewing a car policy. Like starting a new policy. You may need to add, delete or increase some coverage as deemed necessary due to changes in your circumstances.

2. Can I Get a Refund if I Sell my Car?

Yes, you may get a refund of the portion of premiums unused for the remaining policy year. You should inform the insurance company only after selling the car in case of a time-lapse. However, insurance companies may charge a cancellation fee. The best practice is to consult your insurance company before paying.

If you intend to replace an existing car with a new one, substituting the unused portion of premiums to buy a new one with additions to your in-pocket money is the best way. It may save your premiums due to possible discounts offered by your existing company.

3. What is Uninsured or Underinsured Motorist Coverage?

It is a medical expense liability coverage applying to a driver hitting you or your car without carrying adequate liability coverage or with no cover at all. You may be a victim hit by a hit-and-run or unidentified driver and can claim for the medical expense incurred.

The coverage also applies to drivers borrowing your car with your permission and even pedestrians on the accident scene. Like a Third-Party-Only policy, the uninsured or underinsured motorist coverage is insurance protecting the insureds only. 

4. What is Collision Coverage?

It is an insurance cover paying for your car damage in a collision. An insurance company pays for repair or related expenses after you hit another vehicle or others and cause damage to your car.

But if it is another driver’s fault for causing damage to your car, you should seek compensation from the driver’s insurance company for liability protection. Therefore, collision coverage is insurance for your vehicle only, excluding a third party’s car.

Final Thoughts

Besides the obligation to have an adequate car insurance policy, you should choose an appropriate plan based on your circumstances among the three types of car insurance. 

Key takeaways

• The Third-Party Only car insurance fits budget policyholders requiring legally mandatory insurance. 
• People with an old car who want minimum protection can apply for the Third-Party, Fire, and Theft policy. 
• As frequent users on the road, policyholders require more coverages for passengers and drivers and should carry a comprehensive plan with all-around insurance protection.

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