Apart from life and health insurance, general insurance is taken to protect yourself and the things you value. It doesn’t just cover your luggage, but also your property, car and more. With general insurance, your insurer will pay you in the form of an assured sum or agreed-on amount to cover losses under certain circumstances.
Whether you want to or not, a basic form of motor insurance is compulsory for all car owners in almost every country in the world. Specifically, it’s compulsory to have insurance that covers third-party liabilities, also known as Third-Party Only (TPO).
What is third-party liability?
Getting comprehensive coverage is recommended, as better policies cover both you and your vehicle against financial damages or losses that arise from a motor accident. It may even cover you for personal injury, or the cost of damage that you cause to third parties, along with any other loss or damage that you suffer in a motor accident. If you’ve taken a car loan from a bank, it might be compulsory for you to get this level of coverage.
Aside from the level of coverage wanted, most insurers will adopt a "risk factor rating system" when setting a premium price. The more risk you are believed to have, the higher your premium will be. The list of risk factors may include:
Another factor that determines the premium is the No Claim Discount (NCD) (sometimes called a No Claim Bonus). As the name suggests, the NCD is a discount you get on your insurance premiums if you don’t make any claims for a given year. The more consecutive years you go without making a claim, the bigger the discount gets. Think of it as your insurer's way of recognising and rewarding you for having been a careful driver!
The standard NCD rate is as follows:
If you make a claim and you are at least partially responsible for the accident, your discount is reduced. Note that once you have a policy, you must file an accident report following every accident, as not doing so would be a breach of the insurance policy condition.
On the other hand, not violating any traffic rules for three consecutive years means that you are entitled to a Certificate of Merit from the Singapore Traffic Police. Some insurers may reward you with a further 5% discount upon presentation of your Certificate of Merit, so it pays to be a safe driver!
To find out more about NCD, click here.
The cost of the insurance premium should not be the only deciding factor in determining what insurance to get. For instance, comprehensive coverage is certainly more expensive, but it will cover you in many more scenarios than the basic policies. You should also consider how much excess the policy determines. The amount of excess refers to the amount you have to pay out of pocket before the insurance company pays for the rest. Policies with lower premiums tend to have higher excess amounts, meaning that you would need to pay more upfront in the event of an accident.
MOTOR INSURANCE. COMPLETED. ✅
Sources:
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