One of the advantages of having comprehensive car insurance is that you have the peace of mind that any large claims during a car accident may be taken care of. But what if the accident is a minor one? Should you continue to claim from your insurer, or will submitting the claim do you more harm than good?
Why Go for a Private Settlement?
There are a few possible reasons to go for a private settlement instead of making a claim from your car insurer:
- Protect your No Claim Discount (NCD)
A No Claim Discount (NCD) is a discount on your premium if you haven’t made any claims on your policy during the current period of insurance. At DirectAsia, we offer our drivers up to 60% NCD, which means that drivers who have held NCD50 status for at least the last five consecutive years will get an additional 10% discount on their car insurance base premium. Given that the discount you get off your yearly premium is quite substantial, submitting a claim that only gives you a few hundred dollars may not be worth it since it will jeopardise your clean driving record.
However, do note that you may still be entitled to a No Claim Discount even if you have made a claim, provided you are not liable for the accident.
- It may become difficult for you to get a car insurance thereafter
Drivers who make more than 2 claims within a policy year may find it increasingly tough to get a car insurance in Singapore. This is because a high claims record indicates to your insurer that you are a high-risk profile, making them less willing to insure you. Your premium quote may also be unnecessarily high due to this factor. Directasia offers an SOS car insurance which helps this specific group of profile to get the insurance they need, you can call 6665 5555 for assistance.
- The high excess you pay not be worth the claim
In order to reduce their annual premium, some drivers opt for paying a higher excess.
Suppose you suffer a damage of $1,500 and your excess is $500. In this case, what you can claim from the insurer is $1,000. Because of this claim, your NCD drops by 30%. This could add an estimated $300 to your annual premium. Your insurer may also impose a loading. This may amount to another $100 more per year. In the next 3 years, you’ll easily pay more than the amount you can claim.
Thus, if your accident claim is quite small (e.g less than $1,000), it may not be worthwhile to submit a claim since you’ll need to account for the high excess plus risk losing your NCD.
The Disadvantages of a Private Settlement
The major downside of handling the claim privately is the cost. One needs to think carefully before going down the self-funding route, especially if you’re at fault, as you need to meet the other person’s repair bill.
Whether you decide to settle privately or submit a claim, you’d still need to declare the incident to your car insurer. You are required by the General Insurance Association of Singapore to report an accident to your insurer within 24 hours (or the next working day) even if you are not claiming on your own insurance or even when there is no damage. If not, your No Claim Discount (NCD) will be affected.
What to do Following an Accident
If you’ve been involved in a car accident, the first thing to do is to make sure everyone is safe. If someone is hurt, please call 995 for to get immediate help.
Remember not to discuss liability. If you have questions or need anything clarified, call us immediately at 6532 1818. For more detailed information, you can refer to this page.