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A consumer guide to help you choose the motor insurance policy that best suits your needs
FAQs ON VEHICLE MODIFICATIONS
BUYING A MOTOR INSURANCE POLICY - THINGS TO CONSIDER
SERVICE STANDARDS
DISPUTES
USEFUL CONTACT DETAILS
MOTOR INSURANCE - COMMONLY ASKED QUESTIONS
Why do I need motor insurance?
In Singapore it is against the law to drive a motor vehicle
on the road without a valid insurance policy. The minimum
requirement is that the policy provides cover for personal
injury to other parties.
Motor insurance makes good sense. Besides covering you for
personal injury to third parties, it could also cover you
for costs if you damage someone else's property or for
any other loss or damage you might suffer in a motor accident.
Remember: always carry your Certificate of Insurance in your
vehicle. The police may ask to see it in a routine check and
it contains useful information that you will need should you
be involved in an accident.
What types of motor insurance
policies are available?
Insurers offer three main types of motor insurance policies.
Optional benefits are available to meet your individual needs.
| Third Party |
Third Party, Fire and Theft |
Comprehensive |
Optional benefits for comprehensive policies
(may be subject to payment of additional premium) |
| Death or injury to other parties |
Death or injury to other parties |
Death or injury to other parties |
Windscreen damage |
| Damage to other parties' property |
Damage to other parties' property |
Damage to other parties' property |
Damage arising from riot, strike and civil commotion |
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Fire damage to, or theft of, your vehicle |
Fire damage to, or theft of, your vehicle |
Damage arising from flood and windstorm |
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Accidental damage to your vehicle |
Liability of passengers for acts of negligence |
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Personal accident cover (private car only) |
Personal accident benefits for passengers |
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Medical expenses (private car only) |
Additional excess |
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No-Claim Discount protection (private car only) |
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How does the insurer set my
premium?
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:
- Make and model of vehicle
- Engine capacity
- Age of vehicle
- Age, sex and occupation of drivers
- Driving experience of drivers
- Claims history of drivers
- What vehicle will be used for (private use/corporate
use/commercial use/hire etc)
- Type of cover
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 a range of statistics and past
claims information.
What does my insurer need to
know about me?
The insurer needs to know some information about you. This
is to help it assess the business accepted from you and your
needs as a policyholder. The proper premium can then be set.
It is important to answer these questions truthfully. Failure
to do so may affect the level of payout you receive in the
event that you make a claim. The following are some questions
you may be asked:
- Have you made any recent claims?
- Have you ever received a ticket or been charged for a
driving offence?
- Has your vehicle been modified?
- Who will be driving the vehicle?
- What will the vehicle be used for?
- Have you had any recent motor accidents?
- How long have you been driving?
- Do you have any medical conditions or disabilities that
may affect your driving?
If you do not understand what is being asked, please clarify
with your insurer, agent or broker.
What is the insurer recommended
to disclose to me when I buy an insurance policy?
- The premium payable
- The excess (for insured and drivers - named and unnamed)
- The scope and period of coverage
- Restriction on drivers (if any)
- Restriction on repairs
- Non-standard exclusions
- Special accident reporting and claims procedures
- The insurer's cancellation and refund policy
The General Insurance Association of Singapore (GIA) recommends
that l your insurer provide a one-page 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 there are no surprises
should you need to make a claim.
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What is a No-Claim Discount
(NCD)?
If you have not made a claim for a year or more, you are
entitled to a No-Claim Discount (NCD). The NCD reduces the
premium for the following year. This is your insurer's
way of recognising you for having been a careful driver. The
following table shows how the NCD is set by all insurers across
the industry.
| Private car
policies |
Commercial
vehicle and motorcycle policies |
| Period of insurance with no claim |
Discount on renewal |
Period of insurance with no claim |
Discount on renewal |
| 1 year |
10% |
1 year |
10% |
| 2 years |
20% |
2 years |
15% |
| 3 years |
30% |
3 years or longer |
20% |
| 4 years |
40% |
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| 5 years or longer |
50% |
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If I make a claim, will I automatically lose my NCD?
Not necessarily.
All insurers in Singapore use a guide called the Barometer
of Liability Agreement (BOLA) to determine how much each party
is liable in an accident.
The BOLA is designed to speed up claims processing. It does
not diminish your right to contest liability under the law.
Under the BOLA, your NCD will not be affected if your liability
is 20% or less in an accident involving an identified vehicle. In all other cases, your NCD may
be affected.
Does my NCD apply to me, or to my vehicle?
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 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.
Can I insure against the loss of
my NCD?
If you have accumulated a 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 during the year, and still have the discount fully protected.
The 50% NCD is protected as follows:
| Claims during the period
of insurance |
NCD on renewal |
| 1 |
50% |
| 2 |
20% |
| 3 or more |
Nil |
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Please check with your insurer whether NCD protection cover
is available.
Will I lose my NCD if there is a break in ownership of my
vehicle?
Most insurers in Singapore will allow you to keep your NCD
should there be a break in ownership for up to 24 months.
Some insurers set the timeframe at 12 months. You should contact
your insurer for details.
Do I get a refund if I cancel my
policy?
The common practice is that both you and your insurer can
cancel your policy for any reason by giving seven days of
written notice to the other party.
If 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 if a claim has been made on the policy.
Always check carefully and understand what is covered before
you take up a policy.
How can safe driving save me even more money?
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.
For details, please visit the website http://www.ecitizen.gov.sg
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FAQs ON VEHICLE MODIFICATIONS
I wish to make modifications to my vehicle to enhance its performance. What must I do?
You must inform your insurer if you make any modifications to your car.
Why must I still inform my insurer and get his consent, even if LTA has agreed?
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.
What is considered "modification?" Does it affect both big and small changes to my vehicle? For example, I want to switch my wheel to sports rims. Does this apply? What about changing the in-vehicle radio to a multi-DVD entertainment system? Does this apply?
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.
How do modifications impact on my annual motor insurance premiums? Will or do I have to pay more for my motor insurance because of these modifications?
This depends entirely on your insurer. Some charge additional premiums and some do not. We recommend in all instances where you think your car is modified that you advise your insurer or prospective insurer of what changes have been done to your car.
BUYING A MOTOR INSURANCE POLICY - THINGS TO CONSIDER
Not all motor insurance policies are the same. To meet the
individual needs of customers, insurers offer a wide variety
of products. By shopping around, you will have the best chance
of finding a policy with your preferred combination of price,
excess and requirements relating to use and repairs.
As a general rule, the lower the premium, the more restrictions
may apply to what is covered, how much you would be paid in
the event of a claim, and what your options may be in the
event of a claim. For instance, low-priced policies might
come with restrictions as to where you can send your vehicle
for repair or whether new or reconditioned parts are used.
More expensive policies may allow more flexibility in your
choice of repairers, etc.
The following are important things to consider when buying
a 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 hire purchase
or a 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 vehicle to an
Independent Damage Assessment Centre (Idac) for damage assessment?
- Does the policy have restrictions on who is permitted
to repair the vehicle?
- Will reconditioned parts be used for repairs?
What is an excess, and how does it work?
An excess 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.
Why is it a good idea to tell
my insurer who will be using the vehicle?
Declaring the names of the people who will be regularly driving
your vehicle allows your insurer to assess the risk profile
accurately and set the appropriate premium and excess.
You are required to fully disclose information that may have
a bearing on your policy cover. If your vehicle is damaged
while being driven by a person not named in your policy, the
insurer may apply a higher excess due to the unknown risk
covered.
If the vehicle is damaged while being driven by a young or
inexperienced driver not named in the policy, you may be charged
a higher additional excess because the driver represents a
higher degree of risk. The definition of young and inexperienced
driver varies from insurer to insurer. Please check the definition
in your policy.
For some vehicles, such as high-performance cars, your insurer
may specify that coverage will only apply to drivers named
in the policy, i.e. authorised drivers.
Will my insurer cover me if I teach a provisional
driving licence holder how to drive in my vehicle?
No, your motor insurance policy will not cover you. Only
a certified driving school can teach a provisional driving
licence holder how to drive a vehicle.
Can I choose who repairs
my vehicle?
Your insurer may impose some restrictions on who can repair
your vehicle. As part of an ongoing effort to control claims
costs, some insurers use the tender bidding system or authorised
workshops in making arrangements for repairs. Cost savings
will benefit customers by keeping premiums competitive.
More expensive policies may allow you to go to the repairer
or dealership of your choice. Your insurer is encouraged to
disclose any restrictions on repairs before you buy the policy.
Dealer workshops
The warranty on new or relatively new vehicles will often
state that the vehicle has to be repaired by the dealer or
appointed agent of the manufacturer. If this is the case with
your vehicle, you should check with the authorised motor dealer,
agent or distributor on the terms and conditions of your warranty
as repairs by other workshops may affect this.
Authorised workshops
Some insurers limit your choice of repairer to a panel of
authorised workshops which does not always include authorised
dealerships. Upon completion of repairs, a six-month warranty
is usually given.
What is tender bidding?
In order to obtain cost-effective repair for your vehicle,
some insurers use the tender bidding system. Insurers will
invite selected workshops to provide quotes for the repairs
to your vehicle and will award the job to a competitive bidder.
Insurers adopting this system offer assurance that there will
be no compromise on the quality of repairs. A post-repair
survey may be conducted on the vehicle before it is returned
to you.
Insurers adopting the system of authorised workshops and
tender bidding seek to control claims costs without compromising
quality. Such cost savings benefit customers in the form of
competitive premiums.
Will my vehicle be repaired with new or reconditioned
parts?
The aim of most policies is to have your vehicle restored
to a condition similar to the one it was in before the accident.
Based on this principle, for a relatively new vehicle, damaged
items will usually be replaced with new parts, which are either
genuine or OEM (Original Equipment Manufacturer) parts.
However, for vehicles more than three years old, the insurer
might opt to use good-quality reconditioned parts. Such parts
are carefully checked to ensure they do not compromise the
safety or roadworthiness of the vehicle. A six-month warranty
for repairs is usually provided by the workshop.
Your insurer will be happy to clarify its policy on replacement
parts.
What is Idac?
The Idac network was set up to provide a fast, impartial
accident assessment service and to reduce claims fraud. There
are Idac at convenient locations around Singapore.
Many insurers require policyholders to deliver their vehicle
directly to an Idac following an accident. Check with your
insurer if in doubt.
If your insurer is a member of Idac:
- Your vehicle will be towed free of charge to an Idac
within 24 hours of the accident. An assessor will record
visible damage and prepare a report on the replacement parts
needed.
- Once you have the report, you can make arrangements with
your insurer for the vehicle to be repaired.
- Remember: Do not authorise any repair work without the
consent of your insurer as it will need to negotiate repair
costs with the workshop before repairs begin.
If your insurer is not a member of Idac:
- Your authorised workshop will contact your insurer to
have the vehicle surveyed and authorised for repairs.
Should I insure my vehicle with or without COE and
PARF?
The market value of the vehicle includes the certificate-of-entitlement
(COE) and preferential additional registration fee (PARF)
component. If your vehicle is bought using hire purchase or
a car loan scheme, the bank or finance company may require
you to insure the vehicle at its open market value (OMV),
including its COE and PARF. If you own the vehicle, it is
your choice.
Under current Land Transport Authority (LTA) regulations,
when you scrap your vehicle you will not be given a
cash rebate for the remaining value of the COE and PARF.
Instead, the rebate may be used to offset the COE and
PARF amounts when you buy a new vehicle. The rebate
must be used within 12 months of the vehicle being scrapped.
Alternatively, you can sell the rebate to someone else.
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The benefits of insuring with COE and PARF are:
- If you do not wish to buy a new vehicle after a claim,
you save yourself the trouble of having to find a buyer
for the rebate. Your insurer will pay you the full value
of the rebate, which otherwise would not have been refundable
in cash.
- Your insurer absorbs the loss in the sale of COE and PARF
rebate since this is usually at a discount.
The cost of insurance inclusive of COE and PARF is typically
about 5% higher.
SERVICE STANDARDS
What does the General Insurance Code of Practice mean for me?
The General Insurance Code of Practice sets clear minimum
standards for insurers, brokers and agents to meet when dealing
with customers. The code includes the following requirements:
- Brokers and agents should disclose their commission rates
if requested.
- Insurers will respond to your request for insurance within
3 business days.
- Insurers will confirm cover - or otherwise - within 5
business days after receipt of the required information
for policy processing.
- Insurers will dispatch complete policy documents to you within 7 business days from the date of confirmation of
cover.
- Insurers will acknowledge a claim within 3 business days.
- Insurers will pay claims within 7 business days of agreeing
to a settlement.
- Insurers will keep you informed, at least 30 business
days before the expiry of your policy, when you need to
renew your policy or when the policy will expire.
- Insurers agree to work towards using plain English language
in all insurance documents.
DISPUTES
Where can I go to settle disputes with my insurer?
If you feel you have been treated unfairly by your insurer,
you should lodge a complaint directly with the insurer, and
provide the insurer with your details (name, contact numbers,
etc.), the specific nature of your complaint and supporting
documents.
The insurer should acknowledge your complaint within 3 business
days, and if necessary, request additional information from
you within 7 business days of the date of your complaint.
Depending on the nature of your complaint, the insurer may
need more time to attend to it. If so, the insurer should
contact you and update you on the progress within 14 business
days of your last communication, before proceeding to resolve
the problem.
If you have taken these steps and still feel the response
is not satisfactory, or if there is no response within the
timeframes stated above, you should then appeal to the principal
officer of the insurer in writing. You can expect a response
to this within 14 business days.
Finally, if you are still unsatisfied after going through
these channels, you can contact the Financial Industry Disputes
Resolution Centre Ltd (FIDReC). FIDReC was set up to provide
an affordable, independent channel for resolving insurance
disputes involving claims between insureds and insurers of
up to S$100,000 for both life and general insurance. In addition,
FIDReC also handles motor third-party property damage claims
of up to S$50,000. Its operation is provided for in the General
Insurance Code of Practice.
How do I file a claim with FIDReC?
You may lodge your complaint/claim in person, by fax, post
or e-mail.
Filing a claim and having a Case Manager review your claim
is free of charge. If a Case Manager takes your claim up with
the insurer concerned and is unable to facilitate a resolution,
you can then refer your claim to an FIDReC mediator or panel
of mediators depending on the size of the claim. If you choose
to do so, you need to pay a nominal administrative fee of
S$50.
The ruling of the mediator or panel is final and binding
on the insurer, but not on you. If you are not happy with
the ruling, you are free to reject it and pursue a settlement
through mediation, arbitration or legal proceedings. However,
if you accept the panel's ruling, this means you have
chosen to give up your right to proceed with legal action
against the insurer.
USEFUL CONTACT DETAILS
The General Insurance Association of Singapore (GIA)
The GIA is the industry representative body of all 29 general
insurers in Singapore. The GIA is happy to answer your questions
on motor insurance processes and practices.
180 Cecil Street #07-02
Bangkok Bank Building
Singapore 069546
Tel: 6221-8788/9
Fax: 6227-2051
E-mail: feedback@gia.org.sg
FIDReC
112 Robinson Road, #13-03
Singapore 068902
Tel: 63278878
Fax: 6327 8488
E-mail: info@FIDReC.com.sg
Website: www.FIDReC.com.sg
Traffic Police Department
10 Ubi Avenue 3
Singapore 408865
Tel: 6547 0000
Fax: 6547 4900
Website: www.spf.gov.sg
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