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What exactly does car insurance cover? | DirectAsia Insurance

What exactly does car insurance cover?

An insurance plan is a legal requirement for car owners in many countries, including Singapore. For the first-time car owner, it can be confusing to know what type of coverage to choose. On the other hand, those who’ve owned a car for years and need to renew their insurance plan may need to assess how well their current policy works for them.

The first thing to understand is that most car insurance policies don’t cover all types of incidents involving your car. For example, regular car insurance policies in Singapore don’t protect your vehicle in case of theft or fire.

So if you ever encounter either event, you’ll have to shoulder the cost without help from your policy provider.

Let’s look into the details of the common car insurance types in Singapore—Third Party Only; Third Party, Fire & Theft; and Comprehensive.

By understanding the benefits of each type of car insurance, you’ll be able to make an informed decision regarding the policy you should purchase or switch to.

Third Party Only

This is the most basic type of car insurance in Singapore. It covers:

  • Injury to someone else in case of a car accident
  • Damage to someone else's property in a car accident
  • Expenses and legal costs following a car accident

Basic car insurance coverage

Third Party Only cover meets the minimum legal requirement to drive under Singapore law. It only covers damage to the third party’s property or injury to that person in case of a car accident.

Although this is the most affordable type of car insurance, keep in mind that Third Party Only insurance will not cover your own medical and car repair expenses in the event of an accident.

The same goes for instances when your car is stolen or damaged by fire.

Whom it’s for

A Third Party Only plan tends to make the most sense for people who own older or second-hand cars. It’s also a good choice for those who have many years of driving experience in Singapore coupled with a record of zero or very few minor incidents.

Third Party, Fire & Theft

A step up from Third Party insurance is a policy that also covers incidents of fire and theft.

Types of car insurance coverage

Specifically, when you have a Third Party, Fire & Theft policy, your insurer will cover costs concerning:

  • All the items covered by Third Party Only insurance
  • Damage to your car by fire
  • Theft of your car

A Third-Party, Fire & Theft cover is a good compromise for those who aren’t willing or able to pay for a Comprehensive plan, but want more than just basic protection. As the name suggests, the difference between this plan and Third Party Only is protection from fire and theft.

Whom it’s for

Get a Third-Party, Fire & Theft cover if your car is over eight years old, or if chances of your car being stolen are higher in the neighborhood where you live.

Comprehensive car insurance

So what does full-coverage car insurance consist of? As the maximum protection you can get as a private driver, a Comprehensive plan typically covers:

  • All the items covered by a Third Party, Fire & Theft policy
  • Expenses incurred if you crash into a third-party vehicle
  • Expenses incurred if you crash into something besides a car
  • Non-crash damages to your car
  • Damage to your car by flood or a natural disaster
  • Damage to your windscreen or windows

A Comprehensive plan offers complete coverage, taking into account a variety of incidents that a driver may encounter. Not only does it protect your car, it also protects the third party and yourself.

What does full coverage car insurance cover

And unlike the previous two types of coverage, Comprehensive car insurance is the only plan that protects you against unexpected damage from flood or fallen trees.

Whom it’s for

Admittedly, full-coverage car insurance can be expensive—so it’s not for everyone. Consider getting Comprehensive cover if your car is brand new or less than six years old, or if you’re a new driver.

Also note that if you took out a bank loan to buy your car and are still paying for it, the bank will likely insist that you get the Comprehensive plan.

Things to consider when choosing car insurance

Who will be driving your car

If someone else aside from you drives the car, consider adding other drivers to your policy. You can have more than one insured driver in your plan as long as they have a licence.

Your age and gender

Car insurance tends to be more expensive if the insured person is young and/or male. That may not apply to your insurance provider, but it’s worth checking out.

There’s a statistical reason for this—there are more crashes involving male drivers than female ones. Driver fatalities are also higher for young male drivers.

Your driving record

Have you crashed into a car or object before? Do you have a record of over-speeding?

The insurance provider will take your driving history into account when determining the cost of your plan, as you’ll be deemed to have a higher risk of crashing again.

On the other hand, if you have an impeccable driving record, you can enjoy a no-claim discount of up to 60 percent of the cost of your plan.

The type of car you drive

If your car is on the pricier side, your insurance plan will cost more, as it will be more expensive to repair the vehicle and purchase replacement parts.

The area where you live

Expect to pay more if your neighborhood has a high case of theft. Plus, if you park your car on the street instead of in a secure garage, you’ll also have to fork out more money for your coverage.

Your occupation

Your coverage will cost more if you frequently use your car for work. For example, a sales person may drive around the city all day. His car’s wear and tear will thus be more significant than that of an administrative executive who spends the entire day at the office.

Your budget for insurance

When choosing car insurance coverage, the bottom line is your budget. If you can afford a plan that covers a wider range of incidents, then Comprehensive car insurance will give you peace of mind.

On the other hand, if you have an excellent driving record and want to save money on your plan, you can choose either Third Party, Fire & Theft cover or a Third Party only plan. Plus, with a no-claim discount, you can reduce the price you pay for your plan.

Lastly, if you need basic protection for an older and less valuable car, the Third Party Only cover is the most affordable and reasonable option you can get.

Which car insurance type is the best for you?

No one answer is going to fit everyone—it all depends on your specific circumstances and budget. To find out which insurance cover is the best deal for you, compare DirectAsia's car insurance types and get a quote tailored to your needs.