Importance of Car Insurance in Singapore
Car insurance is mandatory for all owners of cars who live in Singapore. From a financial perspective, it is important to ensure that one’s vehicle is properly insured against all possible damages because of the high costs of vehicle ownership in Singapore. Car insurance is especially important for older drivers, but new drivers may also benefit from it. However, newer drivers, especially those who do not have as much money, might sometimes be put off by the high prices of car insurance.
Those who use their car or any other vehicle frequently for work or any other purposes can be protected by insurance in a variety of ways. The type of coverage for each vehicle will depend on the vehicle and other particular details.
Car insurance provides protection from personal liabilities when the driver is involved in an accident accidents. This is the primary reason in favour of car insurance apart from avoiding legal repercussions. A driver could be held personally responsible for the cost of medical bills if another person is injured or killed and the driver is found to be at fault. This may impose a severe financial burden on those involved because there is a possibility that they may need to use a significant amount of their finances or even sell personal belongings in order to pay the expenses.
All premiums involved when one is the victim of an accident are usually supported by one’s own car insurance. Furthermore, the vehicle can be repaired or replaced according to the details which have been stated on the car insurance form. This therefore allows one to avoid having to personally pay for the repair of the vehicle.
In Singapore, another reason why many purchase vehicle insurance is for the purposes of payment for the vehicle. Many customers need funding to purchase a vehicle; they usually do so through a bank loan. The security for the car loan is usually the vehicle itself. If the debtor does not pay for the vehicle on time, the creditor may choose to repossess it. Therefore, many banks will ask those who take out a car loan to purchase car insurance.
Another important reason why car insurance is extremely important occurs when a driver causes damage to another vehicle. Car repairs can be costly. A driver will often be required to pay to repair or replace the vehicle damaged when at fault. Also, it’s cash you have to get out of the bag. Drivers also bear responsibility for any damages which have been caused to property. Car insurance will ensure that the financial loss suffered will not be of consequence to the driver.
Every insurance company wants its customers who purchase car insurance to drive in a careful manner. The more careful the riders, the fewer statements they have to make. Drivers who rarely have to make any claims may claim advantages brought about by the No Claim Discount (NCD). The NCD makes it so that for each claim-free year that a vehicle has (to a limit of 50%), the price of mandatory motor insurance will be reduced accordingly. Drivers are always to be aware of their NCD status because NCD advantages accumulate instead of being destroyed.
In contrast to the NCD, companies increase premiums for drivers with high risks. When drivers are irresponsible and reckless with their driving, they will soon find that their motor insurance will be unaffordable and not covered by any reputable insurers.
How Cars Are Insured in Singapore
Comprehensive Car Insurance
Most people who purchase car insurance in Singapore choose to purchase comprehensive car insurance. Such is the case because most drivers believe comprehensive car insurance to be the best form of car insurance which exists in Singapore. Some of the protections granted by comprehensive car insurance include fire, theft, and damages caused to one’s vehicle. Another reason why comprehensive car insurance is extremely common in Singapore is that the vast majority of car loans require the person who took out the loan to have purchased this type of insurance. The explanation for this is because the vehicle is essentially owned by the financing company due to the fact that the vehicle was not entirely reimbursed. This therefore means that the vehicle does not have any harm or total loss. A driver in Singapore will earn the right to choose to purchase other forms of coverage if so desired after the driver has completely paid the amount required for the vehicle.
There are several other protections which are granted by most comprehensive car insurance schemes in Singapore. Such protections include coverage in the event of personal accidents, towing services and medical compensation, protection by way of the NCD, use benefit losses, overuse waivers, and free choice of workshop. These additional protections are ordinarily subject to an additional fee; however, they are often free during promotions offered by insurance companies.
Third-Party, Fire, and Theft Car Insurance
Those who have purchased third-party, fire, and theft car insurance have the option to file a reimbursement and be covered by insurance if they happen to have their car stolen. If their car is set on fire, they may also receive a suitable payment from the insurance company. However, one disadvantage of this form of car insurance is that a driver cannot claim any payment in cases of car accidents because such incidents are not covered by third-party, fire, and theft car insurance. Those who own such a form of insurance will have to pay for the repair of the car on their own.
Third-Party Only Car Insurance
Third-party only (TPO) car insurance covers only the other party affected when an accident takes place. This form of insurance therefore pays for the damages of the other person. Therefore, if one’s car as well as another’s are damaged during an accident, this form of insurance will only pay for the damages caused to the other driver. The driver must pay for the damages caused to the driver’s own car. This insurance policy is the most basic type of insurance policy offered to drivers in Singapore.