I came across a case posted by a netizen seeking help online because his insurer for his motor insurance decided to withdraw their coverage due to an unnamed driver who caused the accident. Many netizens advised him to seek legal advice and so on but the particular netizen kept harping on the fact that his insurer should not just wash their hands of the incident because he had authorised the driver to drive his car and the driver should be duly covered by his motor insurance, even though the person is under 30 year-old and is excluded by his motor insurance. While he admitted negligence on his part when purchasing the insurance, he kept lamenting and blaming the insurers and advised others against buying cheap insurance.
I could not agree with him.
Insurance can be cheap and good. It all depends on how you choose the options.
Now, let me reiterate here that I am not related to any party here, including any financial institute or insurance company. However, I am taking the opportunity to highlight some of the key points when choosing or buying a motor insurance. These are purely my opinions and these are exactly what I looked out for when I chose and purchased my motor insurance.
So what exactly do you need to look out for when choosing or buying a motor?
1) Coverage
There are 3 types of motor insurance in Singapore:
1) Comprehensive (which basically covers own damage, 3rd party, fire & theft)
2) 3rd party, fire & theft (which covers 3rd party, fire and theft only, own damage is not covered)
3) 3rd party only (which covers only 3rd party. Own damage, fire and theft are not covered at all)
Comprehensive is compulsory for vehicles under loans.
Only fully paid vehicles can be insured by option (2) and (3)
NOTE: The word comprehensive does not mean the insurance covers everyone that you authorised to drive the vehicle.
Memory shortcut:
3rd party only: cheap
Comprehensive: expensive
2) Driver(s) covered
I used to get agents to help me sought quotations from different insurance companies and I realised a large disparity in premiums offered by different companies. One of the factors affecting the premiums is the person(s) covered by the motor insurance.
The most expensive motor insurances are generally those that cover everyone that you authorised to drive the vehicle, regardless or age and experience. The premium can be more than double of those that only cover the owner of the vehicle.
I also found that some motor insurance that you can get online can be so much cheaper because they typically only cover the owner of the vehicle. Hence, if you would like other people to drive your vehicle, you have to include them in the motor insurance and the premium will be increased accordingly.
Generally, premium will be increased if:
1) more people are to be covered by the motor insurance
2) young people are to be covered by the motor insurance (usually under 25 or 30 years old)
3) inexperience people are to be covered by the motor insurance (usually less than 3 years from obtaining licence)
Some insurances allow you to include coverage for anyone authorised by the owner so long the person is more than 30 years old.
Some insurances require you to name the person specifically, regardless of age.
Some insurances require you to name the person specifically only of the authorised person is less than 25 or 30 years old.
Some insurances do not even cover anyone who is less than 30 years old, regardless of whether the person is authorised by owner of vehicle or not.
Hence, read the requirements carefully and think who might be using your vehicle. Then ensure that you have them all covered by your motor insurance. This is very important because in Singapore, it is an offence to drive a vehicle without valid motor insurance coverage.
Memory shortcut:
Cover self: cheap
Cover others: expensive
3) Excess
Excess is what you will be required to pay up if you are claiming against your own motor insurance in the event of an accident. It can range from $500 to a few thousand dollars.
Generally, the higher excess required for claims, the lower the premium you need to pay. The lower the excess required for claims, the higher the premium you need to pay.
Some insurance companies allow you to choose the amount of excess payable to allow you to save on your premium. Some have fixed excess which you cannot change.
Memory shortcut:
High excess: cheap
Low excess: expensive
4) Authorised workshop or preferred workshop
Some insurance companies have tied up with workshops in Singapore. (Lesser chance of inflated claims)
Hence, in the event of an accident and if you were to claim against your own insurance and you do not mind going to the insurance company's authorised workshop, you can opt for authorised workshop and you will be offered a lower premium.
If you have your own preferred workshop and would like to have your repair done there in the event of an accident, then you will have to pay a higher premium for the motor insurance.
This is only applicable if you are claiming against your own insurance for your own damage. If you are claiming against the other party's insurance for your own damage, you may go to any workshop as you wish.
Memory shortcut:
Authorised workshop: cheap
Preferred workshop: expensive
5) Replacement/Courtesy car
In the event of an accident and you are claiming your own insurance, would you like to have a replacement/courtesy car to cover you when your vehicle is in the workshop? If you definitely need a replacement/courtesy car, be prepared to pay a higher premium. If you can do without a car when your vehicle is in the workshop, then you can enjoy lower premium.
Memory shortcut:
No replacement/courtesy: cheap
Replacement/courtesy car provided: expensive
Buying a motor insurance is not buying something off the shelf. You have to look and read carefully the terms and conditions carefully to ensure that you are buying something that suits you. In the event of dispute, you cannot just say "I don't know" and expect the insurance company to buy your sob story.
Due to the fact that there have been cases of "fronting" or false declaration in motor insurance industry, many insurance companies are taking steps to ensure cheating is minimised. (Fronting refers to getting an older and more experience person to insure a vehicle under his/her name, while the actual driver is a younger/inexperience. Premium is lower for older/experienced person). Hence, do be honest and truthful when declaring the actual owner, intended driver(s), purpose(s) the vehicle might be used for etc.
Last but not least, drive safely and responsibly.
Happy Lunar New Year!
Tags: motor insurance, coverage, driver, coverage, excess, authorised, preferred, workshop, replacement car, accident
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