Buying a Motor Insurance Policy
Frequently Asked Questions
A No-Claim Discount (‘NCD’) is an incentive given to you if no claim has been made under your policy for a year or more with your current/existing insurer. It reduces the premium you have to pay for the following year. This is your insurer's way of recognising and rewarding you for having been a careful driver. The rate of NCD depends on your type of vehicle (private or commercial/motorcycle) and the period of insurance with no claim.
The following table shows a common method to calculate the rate of NCD.
Private Car Policies
- 1 year
- 2 years
- 3 years
- 4 years
- 5 years or longer
- 10%
- 20%
- 30%
- 40%
- 50%
Commercial Vehicle & Motorcycle Policies
- 1 year
- 2 years
- 3 years or longer
- 10%
- 15%
- 20%
NCD is just one of the factors affecting the premium. Premium quoted by an insurer based on a higher NCD would not necessarily be lower than that quoted by another insurer based on a lower NCD in a competitive market. Consumers are advised to shop around and compare premium rates before buying.
Not necessarily. Your NCD may not be affected if you are found totally not at fault in an accident involving another vehicle. In all other cases, your NCD may be affected.
If there is a claim made under the policy, your NCD will be reduced as follows.
Private Car Policies
- 50%
- 40%
- 30% and under
- 20%
- 10%
- 0%
Commercial Vehicle & Motorcycle Policies
- 20%/15%/10%
- 0%
If you make more than one claim in a year, your NCD will be reduced to 0%.
Please check with your insurer whether your NCD will be affected.
Some insurers do offer a protection on your NCD in the event of a claim. Please refer to question “Can I insure against the loss of my NCD?” to find out more.
In principle, your NCD applies to you and not to your vehicle. For example, if you sell your vehicle and buy another one, you will retain your NCD. However, if you own more than one vehicle, you might have a different NCD for each vehicle. You should check the details with your insurer, but generally:
Your NCD can-
- Be transferred if you decide to switch insurer.
- Be transferred to another vehicle you own, but it cannot be applied to more than one vehicle at any point in time. For example, if you have accumulated a 30% NCD while using one vehicle, it does not follow that the same NCD applies to any other vehicle that you own or decide to buy. In other words, you will have to earn the NCD for each vehicle separately.
Your NCD cannot -
Be transferred to another person, except for your spouse and within the current insurer only. Transfer of NCD to your spouse will not be applicable if you renew your policy with another insurer.
Most insurers in Singapore will allow you to keep your NCD should there be a break in vehicle ownership for up to 24 months. Some insurers set the timeframe at 12 months. You should contact your insurer for details.
If you have accumulated a certain level of NCD, for example 50% NCD (five years or longer without a claim), some insurers may allow you to buy protection against the loss of the discount.
By paying a small amount of extra premium, you can make one claim within the period of insurance, and still have the NCD fully protected. The protected NCD is as follows:
Claims made during the period of insurance
- One
- Two
- Three or more
Protected NCD Entitlement upon renewal with same insurer
(Private Car Only)
- 50%
- 20%
- Nil
NCD Entitlement upon renewal with new insurer
(Private Car Only)
- 20%
- Nil
- Nil
Unlike NCD, the protected NCD may not necessarily be transferable to another insurer. Having an NCD Protector will also not protect you against non-renewal or cancellation of your policy by your insurer.
The features of a NCD Protector may differ from insurer to insurer. Always check carefully and understand how the NCD protection cover works before purchasing the protection.
Please check with your insurer whether NCD protection cover is available.
If you have not violated any traffic rules for three consecutive years, you are entitled to a Certificate of Merit from the Singapore Traffic Police.
Should your NCD be 30% and above for a private car policy or 20% for a privately owned commercial vehicle policy, some insurers may reward you with a further 5% discount upon presentation of your Certificate of Merit.
Insurers might not insure vehicles with modifications to the vehicle, notwithstanding whether the modifications passed LTA's inspection standards. Motorists must declare all modifications, irrespective of acceptance by LTA, for underwriting.
- You must inform your insurer if you make any modifications to your car, even if they have passed LTA’s inspection standards. Non-disclosure may result in your claims being repudiated.
- Many insurers consider modifications made to a car as material information in deciding what premium to charge for a policy; some insurers also do not wish to insure modified cars.
- We recommend in all instances where your car is modified that you advise your insurer or prospective insurer of what changes have been done to your car.
Modification refers to changes made to a car which are directly related to how it operates as a car. This includes changes to engine performance, drive train, air intake systems, exhaust systems, transmission systems, or any changes to the handling characteristics of the car including suspension systems, strut towerbars, or bracing as well as any changes made to the control unit of such parts. This list is not exhaustive.
Routine maintenance where like-for-like parts are used, that is in accordance with the manufacturer's standard specifications, will not be considered as modification.
Accessories are parts of your car which are not directly related to how your car operates and will not impact your insurance coverage. This include upholstery, audio equipment, multi media equipment, communication equipment, personal computers, satellite navigation and radar detection systems, provided they are permanently fitted to the car and have no independent power source.
Changes made to rims/tyres and body kits are not considered a modification when they are within the manufacturer's defined and acceptable specifications. However please note that in case of any damage during an accident, insurers will only replace or repair with suitable part(s) in accordance with the manufacturer's standard specification.
If you require further clarification, please contact your insurer.
Do ask your insurer and shop around. Some insurers charge additional premiums and some do not. We recommend that in all instances where your car is modified that you advise your insurer or prospective insurer of what changes have been done to your car and ask how your premiums and coverage, may be affected.
Non-disclosure of vehicle modifications may result in repudiation of claims by your insurer.
Frequently Asked Questions
Besides the fact that it is against the law in Singapore to drive a motor vehicle without a valid insurance policy to cover third party bodily injury, motor insurance makes good sense as it gives you protection against financial damages or losses that may arise from a motor accident.
It covers you for personal injury that you may cause to third parties, and can cover your costs if you damage someone else's property. It can also cover any other loss or damage that you may suffer in a motor accident.
A motor insurance policy typically imposes an excess which is the cost you may be required to bear in the event of a claim being made against your policy. Generally, the more risk the insurer carries the higher the excess will be.
Insurers offer three main types of motor insurance policies.
The key features of the policies are as follows:
Third Party
- Death or injury to other parties
- Damage to other parties' property
Third Party, Fire and Theft
- Death or injury to other parties
- Damage to other parties' property
- Fire damage to, or theft of, your vehicle
Comprehensive
- Death or injury to other parties
- Damage to other parties' property
- Fire damage to, or theft of, your vehicle
- Accidental damage to your vehicle
- Windscreen damage
- Damage arising from riot, strike and civil commotion
- Personal accident cover (private car only)
- Medical expenses (private car only)
Optional benefits for comprehensive policies
(may be subject to payment of additional premium)
- Damage arising from flood and windstorm
- Liability of passengers for acts of negligence
- Personal accident benefits for passengers
- Additional excess
- No-Claim Discount protection (private car only)
Optional benefits are available to meet your individual needs. Do note that optional benefits for comprehensive policies may be subject to payment of additional premium.
By law, you are required to have a motor insurance policy that provides cover for personal injury to other parties. To find the policy that suits your needs, shop around and compare products that may offer your preferred combination of price, excess and requirements in terms of use and repairs.
As a customer, you need to keep in mind that not all motor insurance policies are the same. Insurers offer a wide variety of products to meet the individual needs of customers. Again, it is best to shop around to find a policy with your preferred combination of price, excess and requirements in terms of use and repairs.
Remember that if the premiums are lower, there may be more restrictions that may apply to what is covered, and your options in the event of a claim.
For example, lower-priced policies may come with restrictions such as on who is the main driver of your car or whether your car can only be driven by named drivers; where you can send your vehicle for repairs; or whether new or reconditioned parts are used. Higher priced policies usually cover all your authorised drivers who have a valid driving licence, and may allow more flexibility in your choice of repairers, etc.
Policyholders should refer to the Certificate of Insurance which clearly states who is authorised to drive the vehicles.
Please note that different excess may be applicable when your authorised drivers are involved in an accident. Please check with your insurer on the applicable excess.
Take note of these points when considering whether to buy a certain motor insurance policy:
- Are there restrictions on who can drive the vehicle?
- What extra cover can you buy?
- Does the policy meet the requirements of your bank or finance company if you are buying the vehicle on a hire purchase or car loan scheme?
- How much excess will you be required to pay should you need to make a claim?
- Does the policy require you to take your damaged vehicle only to those authorised workshops listed in your policy for repairs?
- Does it have restrictions on who is permitted to repair the vehicle?
- Will reconditioned parts be used for repairs?
- The premium payable
- The excess (for insured and other drivers - named and unnamed)
- The risks or events covered and period of coverage
- Restriction on drivers (if any)
- Restriction on where repairs could be done
- Non-standard exclusions
- Special accident reporting and claims procedures
- The insurer's cancellation and refund policy
GIA recommends that your insurer provides an executive summary of key contract terms and obligations with your policy. Please make a point of requesting this if your insurer has not provided it. It is important to read your policy as soon as you receive it. This way, you can be sure that there will be no surprises should you need to make a claim.
The insurer needs to know some basic information about you. This is to assist the insurer to better assess the underwriting risk so that proper premiums can be set.
It is important to answer these questions truthfully. Failure to do so may result in your policy being void and your insurer may repudiate any claims against the policy. The following are some frequently asked questions:
- Have you made any recent claims?
- Have you had any recent motor accidents?
- Have you ever received a Traffic Summons or been charged for a driving offence?
- Has your vehicle been modified?
- What will the vehicle be used for?
- How long have you been driving?
- Who will be driving the vehicle?
- Do you have any medical conditions or disabilities that may affect your driving?
Please clarify with your insurer, agent or broker should you have any doubts in answering any questions.
Most insurers in Singapore adopt a "risk factor rating system" when setting your premium. This means that the premium is based on factors other than the vehicle's value or the price you paid for it.
In general, the following risk factors are considered when setting your premium:
- Vehicle Profile
- Insured/Driver(s) Profile
- What the vehicle will be used for (private use/corporate use/commercial use/hire etc)
- Type of cover
- Claims history
Insurers may also charge a higher premium when there is an impending claim against you but you could request for a possible refund if it is concluded that you are not liable for the impending claim.
These risk factors will not necessarily have an equal influence on the size of your premium. Your insurer will give each risk factor a weighting based on its range of statistics and past claims information.
You may be entitled to a discount on your premium with a No- Claim Discount (NCD). Please refer to section on NCD to find out more.
Yes, it is possible. Your claims history is not the only factor your insurer looks at in setting your premium. All insurance, including motor insurance, is about pooling of risks. As such, a pool with high claims experience will have higher premiums. Inflation in labour and material costs could also result in higher claims costs. There are also other risk factors that insurers have to consider in their pricing models in setting your premiums, as explained in question 6.
There are more than 25 motor insurers in Singapore, each with their own pricing models. You are encouraged to shop around for a suitable policy based on your needs.
The common practice is that both you and your insurer can cancel your policy for any reason by giving written notice to the other party. If you or your insurer cancels the policy, it will refund you the unused proportion of the premium.
Some insurers refund the premium on a pro-rata basis with the deduction of a small administration fee. Others use a method that calculates what would have been charged if your policy were a short-term policy. This usually applies if the cancellation is at your request. Please check with your insurer how this is calculated.
Note that refunds might be subject to a minimum amount, and that your insurer might reserve the right not to refund any premium such as when a claim has been made, subject to the terms and conditions of the policy. Please check with your insurer before committing to the policy.
Yes. Your insurer may decide to cancel your policy if you breach any terms and conditions, or provided false information on the insured/driver profile, your claims history, vehicle profile, etc. Your insurer may refuse renewal due to poor claims history in relation to vehicle and/or insured driver profile.
Please check with your insurer on the notice period in relation to the cancellation of your policy.