Auto insurance policies can be confusing. Here, we demystify common terms so that your next chat with the insurance company is less painful.
Having adequate driving insurance means protecting your car and yourself. Know what to look for and understand the terms before you sign up or renew your current policy.
Types of coverage
There are three main types of coverage: Comprehensive, Third-Party Only (TPO), and Third-party, Fire & Theft (TPFT).
Comprehensive, as the name implies, is more extensive and therefore more expensive. Apart from all that TPFT covers, it includes losses and damages to your passengers, car, belongings and yourself. If your car is more than 10 years old, and does not fall under the category that could apply Comprehensive coverage; in that case, drivers may opt for the TPO as it’s highly possible you will scrap your car instead of repairing it after an accident. TPO — the most basic, legally required coverage — covers damages and medical costs of the other driver involved. TPFT extends coverage to include losses incurred in the event of an accidental fire, theft and vandalis
The excess on your policy refers to the amount you are required to pay for damages you have caused, leaving the remaining amount for your insurance to bear. A $500 excess means that, if repairs cost $3,000, you only pay the first $500 and the remaining $2,500 will be borne by your insurer. A higher excess usually corresponds to a lower premium and vice versa.
No-Claim Discount (NCD) is your insurance report card — it tells the insurance company whether you’ve been a good or bad driver. Each year that you don’t make a claim allows you to enjoy a discount (usually between 10% and 50%) on your premium, which is incentive for driving safe. Certain insurers also give premium rebates if you fulfil certain conditions, such as installing an in-car camera, using their preferred workshops, and even driving less frequently. If you travel to Malaysia often, there are certain add-ons to your main policy that provide coverage and assistance in Malaysia — not all insurance companies provide this enhanced coverage, so make sure you check this with your insurer.
For people older than 65 years, car insurance tends to be more expensive — it is believed that elderly drivers present a bigger risk on the roads. The good news is that AA Singapore has partnered Liberty Insurance to provide coverage for elderly drivers, who are 60 years and older, based on driving records and claims experience rather than on age alone. Called AA Senior Motor Plus, this insurance product takes into consideration that elderly drivers tend to drive more slowly and cover shorter distances; they are also less likely to drive in bad weather and at night, thus making them safer and less risky drivers. This policy includes a free medical examination, a 5% premium discount for those with 30 or more years of driving experience, and complimentary transport to destination in the event your car is not roadworthy after a reported accident or breakdown in Singapore. For exact terms and conditions, check https://aas-insurance.com.sg/aa-senior-motor-plus/.
Terms and conditions apply
There are a few conditions that will invalidate your policy. If you lie about the circumstances surrounding your car accident or refuse to provide the necessary information pertaining to it, your insurer can refuse to cover you. Drunk driving or under the influence of banned substances is self-explanatory. Buying insurance using the record of another driver with a better track record to get a more favourable premium is illegal and is considered fraud. For those looking to use your car for private hire, you will need a commercial car insurance policy.