How does an auto insurance policy work? : Autoworld Buzz: Auto World News
Auto insurance in Singapore is not a choice or a luxury. It is a must have or a necessity if you own a car. Many people do not have a clear idea about an auto insurance package in Singapore. Dealers also offer a lot of confusing terms like no-claims bonus, coinsurance, and deductible. If you want to make an informed decision, you need to do your research and understand how an auto insurance policy works.
A brief overview of the different types of car insurance packages in Singapore
Generally speaking, there are three types of auto insurance options available in Singapore namely Third Party Only Insurance (TPO), Third Party Insurance, Fire & Theft, and Full Coverage. The first, third party insurance, refers to insurance that covers the other party involved in an accident. If your car collides with another vehicle, this type of insurance covers damage caused by you to the other vehicle.
Covering both parties involved in an accident, Singapore third party auto, fire and theft auto insurance protects the interests of all stakeholders. You can expect the best protection against fire and theft. This type of insurance also covers vandalism.
As the name suggests, Singapore comprehensive auto insurance covers you for almost everything. Most people prefer to purchase this insurance not only because of the great benefits it offers, but also because it is a condition of many auto loans. It covers death for you and others, medical expenses, theft, fire and accidents.
Some Singapore auto insurance companies often pay the entire claim if they find that the accident was not due to your fault. When choosing an auto insurance company, you need to do your research. It is always advisable to rely on a Singapore auto insurance comparison graph that offers precise information.
Method of calculating the premium
Several factors are taken into consideration when calculating the premium for your insurance coverage. The Risk Factor Rating System (RFRS) is the method applied to determine the premium. Driver factors include age, experience, gender and occupation. When it comes to the car, the essential factors are the OPC, the type and capacity of the engine and the age of the vehicle.
Another important aspect that influences the premium of an auto insurance policy is the bonus or claim free discount. This is a premium or discount granted by the insurer each year. Safe Driver Discount also has an impact on the premium. This is a special discount offered to reward drivers who have not had demerit points in the past two years.
Learn more about the deductible, deductible and coinsurance
You need to understand these three terms better if you want to know how an auto insurance policy in Singapore works. Many people use these terms interchangeably. It’s a bit of a complex concept to understand. However, you can think of it as the amount that needs to be paid before your auto insurance goes into effect.
Let us make it a little easier for you. Imagine that your excess amount is set at $ 500. The total expenditure required for the repair work is estimated at $ 2,000. As the insured, you must make a payment of $ 500. The insurer will pay the balance of $ 1,500. The basic intention behind this concept is to make drivers understand that they have to pay for damages due to their faulty driving. This approach motivates them to drive with better focus and safety awareness.
Consider another situation. Imagine that your excess amount is $ 600 and the estimate for the repairs is $ 500. In this situation, you will make payment for the repair work ($ 500). However, this amount is less than your excess amount of $ 600. In this situation, you don’t have to make an insurance claim. This approach helps you protect your rebate without a claim. One important thing you should remember is that all accidents or damage should be reported to the insurer, regardless of the size or severity.
Many people want to know if they can change the excess amount payable. The excess amount of younger and inexperienced drivers is always fixed at a higher rate. The best thing is that the most reputable insurance companies in Singapore allow you to adjust your deductible amount to suit your unique circumstances and budget.