Tuesday, November 19, 2013

Car Insurance


Car insurance? What the heck? How old are you and why are you telling me about car insurance?

Well, I specifically chose to write about car insurance, because I'm sure that is going to be one of the last insurances that I will be getting, plus it is also again a straightforward sort of insurance.

Car prices in Singapore are through the roof, gas isn't cheap, neither is the upkeep through parking, ERP, maintenance, insurance and air fresheners. A car would probably be my 1st big ticket expense once I start my life as an independent adult. However, that being said, car insurance in Singapore is rather straightforward and simple to comprehend, which is why I'm going to tackle it.

Of course I don't know too much about car insurance. Truth be told, I only ever had 1 minor accident before, when my car rolled into the rear of another car. At a red light. Because I split milo in the car. Silly reason to have an accident though. No damage on my vehicle, huge dent in his. Other than that, the only other accident I ever had was accidentally reversing into another car in a carpark, but that didn't have any damages at all, thank goodness.

I do help evaluate my company's various insurance plans, so I have some knowledge of what's going on. I've also searched the web and found a very decent variety of articles which I found very straightforward and easy to understand. The first one is from MoneySmart about the basics of car insurance, followed by another article by them regarding reducing premiums. Lastly, this is a forum post with a bit more no-nonsense approach about the different components of the premiums. These articles are really insightful and I would advise anyone curious to know more about car insurance explained in a simple manner to look at them.

So from my understanding, to reduce your total spending on car insurances and excesses:
  1. Ensure that the restrictions of the driver suits the usage and users of the vehicle 
  2. Opt for no preferred workshops if you are indifferent
  3. Don't have traffic offenses to be able to get a Certificate of Merit (COM)
  4. Don't have accidents to accumulate the amount of No Claim Discount (NCD)
  5. Make sure the excess/premiums suits your needs
  6. Don't get extra coverage that you don't need it
I think that actually point #3 and #4 can rake in huge amounts of savings. I didn't even know about the COM and that having it will reduce premiums by 5% if you have had no traffic offences over the past 3 years. Click here to check yourself out. I have it... for now, haha! I also didn't know that the NCD could accumulate up to 50%! Together with the COM discount, you could be looking at a very pretty 55% off your auto insurance if you're a very safe driver.

I would also like to add that the car insurance should also cover personal liability in case of an accident which affects a third party in terms of property damage, or even injury and death. The vehicle itself should also not be a financial liability even if it is completely wrecked.

So having a small, old car and being a safe driver can probably kick down your premiums to over 60% compared to what a young gun would be paying. While of course this sounds like a fantastic way to save money on car insurance while having the adequate coverage that you need, I suppose the main hurdle to this would be affording to buy a car in the first place, haha!

The way prices are, I might never even get to worry about this though!

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