Having car insurance is a must if you own a car in Singapore. When it comes to how much you have to pay for coverage, there is no one-size-fits-all insurance premium. Insurance companies will assess each driver’s risk profile as well as other factors when determining your coverage costs. Here are some of the more common things they evaluate before setting your car insurance premium.

Age and Driving Experience

It goes without saying that the longer you have been driving, the less you have to pay – up to a certain point.

Usually, if you are under 25 years old and/or have a driving licence for less than 2 years, expect to pay more for your car insurance. Younger and less experienced drivers are seen as higher risk and less adept at handling their vehicles. Thus, most insurers will charge them higher premiums compared to drivers with more years of driving experience under their belt.

That said, once you hit the other end of the age spectrum, say age 65 and above, some insurers will increase your premiums as well.

Vehicle Age, Make and Model

It’s not your old banger that will incur higher premiums but rather that cool continental wheeler you have just bought.

Newer and high-end vehicles tend to attract higher premiums because of the higher cost of repairs and replacement of expensive parts. Also, if you own a car with a higher engine capacity, such as SUVs (Sports Utility Vehicles), you can expect to pay more for your coverage.

In general, car insurance premiums get lower as the car gets older, until it reaches an age of 10 years or more when the premiums will remain the same.

Claims History

Another major consideration is your history of claims.

Your claim record stays with you for 3 years in Singapore. If during this period, if you were found to have filed at least 2 claims, or a claim of more than $30,000, you may find it virtually impossible to find any insurance company willing to cover you.

So, drive safely and avoid making any claims if you want to lower your insurance costs.

No Claim Discount (NCD)

As its name implies, the No Claim Discount (NCD) is an incentive by car insurance companies to encourage their policy-holders to maintain a claims-free driving record.

The NCD increases by 10% each claim-free year of your policy renewal with the same insurer, up to a maximum of 5 years. That means you can enjoy an NCD of up to 50% that can significantly lower your car insurance premiums.

Coverage Policy

The type and extent of coverage selected also affect premiums. Comprehensive coverage, which includes coverage for third-party liabilities, tends to be more expensive than your basic Third-Party Only (TPO) coverage or Third-Party, Fire and Theft (TPFT) coverage.

>>READ: An Easy Guide to Car Insurance in Singapore

Policy Excess

The policy excess is the amount that you agree to pay out-of-pocket before your car insurer covers the rest of the claim.

Opting for a higher excess can lower premiums, but it means higher upfront costs in the event of a claim. You should carefully consider your financial situation and risk tolerance when choosing the excess amount.

Purpose and Usage of Vehicle

Cars deployed for commercial purposes or ride-sharing services may attract higher premiums compared to those used solely for personal transportation. This is because of the increased exposure to traffic risks.

Different factors at play affect how much you pay

Each car insurance company in Singapore has its own underwriting criteria to assess risk and determine the premium pricing. While you cannot control certain factors such as your age and driving experience, maintaining a safe and clean driving record without filing any claims can help reduce your car insurance premiums over time.