Whether you’re a first-time driver or a proud owner of multiple cars (wow, go you!), car insurance is admittedly not the easiest thing to understand. While most drives are smooth ones, anything can happen while we’re on the road (touch wood), so it’s important to understand how your car insurance works.
In this article, I’ll take you through everything you need to know about car insurance excess in Singapore, so that you’ll be able to drive (and claim) with even more confidence than before. 💙
What is car insurance excess, and what is it for?
Car insurance excess is the maximum amount a driver must pay out of their pocket before the insurer steps in to cover the rest in the event of an accident.
For example, if your car insurance excess is $500, and your car repair cost is $800, you must fork out $500, and your insurer will pay the remaining $300.
However, if the repair cost is lower than your excess amount, you must bear the full cost. For instance, if the repair cost comes up to $400, you’ll have to pay the entire amount.
While car insurance excess may seem like a pesky commitment, it’s how insurance companies pass some responsibility to drivers for damages. This encourages safe driving behaviour.
Insurance excess also reduces the amount of small claims, which helps keep your premiums lower.
What are the different types of car insurance excess?
There are 2 different types of car insurance excess:
Compulsory excess
Compulsory excess is a fixed and non-negotiable amount that is set by your insurance policy. It’s determined based on various factors, such as your age, car model, years of driving experience, and past accident record, among others.
Generally, younger drivers and those driving high-end cars will be required to pay a higher insurance excess.
Voluntary excess
On the other hand, voluntary excess is an amount that you can decide to add on top of your compulsory excess.
For example, if your compulsory excess is $500 and your voluntary excess is $200, your total car insurance excess is $700. That means that if and when you make a claim, you must pay $700, and your insurer will cover the remaining cost.
Should I opt for voluntary insurance excess?
You might be wondering why anyone of sound mind would want to pay a higher excess. I know I thought that too. But there are some pretty good reasons why.
You pay a lower premium
In general, the higher your insurance excess, the lower your premium — since you’re agreeing to take on more of the risk.
You’re an experienced driver
If you’re confident in your driving skills and have rarely or never experienced accidents, choosing a higher excess would give you a lower premium — which means more savings for you!
You may get to enjoy No-Claims Discount (NCD)
If you choose to have a higher insurance excess, it means you’ll take care of smaller repairs yourself without having to make a claim. Go a full year without making a claim, and you’ll be eligible for a NCD. That means you’ll get to enjoy a lower premium for the next year!
Maintaining a claims-free record will also help you buy insurance policies in the future with terms and premiums that are more in your favour.
How do I change my car insurance excess?
If you’re thinking about changing your car insurance excess, you can always reach out to your insurer. You can get them to change your voluntary excess amount, or get a new insurance policy with a different compulsory excess.
Changing your excess isn’t an easy call, though. It’s a good idea to weigh the pros and cons first. The biggest thing to think about is how likely you might get into an accident. You probably shouldn’t increase your excess amount just to pay lower premiums without considering your risk level.
When exactly do I pay the insurance excess?
Before anything else, let me assure you that you don’t have to pay insurance excess every time there’s an accident.
If you get into an accident, you’ve got up to 24 hours to submit an accident claim report to your insurer. Your insurer (and, if necessary, the police and courts) will determine liability (a fancy word for who’s responsible) in the incident.
If you’re found not to be at fault, whoohooo! You’ll walk away with your wallet intact. In this case, the other party’s insurance policy will cover the damages. However, if you’re found to be responsible in some way, you’ll need to pay an amount up to your car insurance excess.
Where will you find information on car insurance excess?
Most car insurance policies come with an excess. For car owners, take a look at your policy documents or contact your insurer to learn more about your excess type and amount.
If you’re using a carsharing or car rental service, you should be able to find the insurance excess information in the Terms and Conditions or FAQ. For example, GetGo’s excess information is available in both our Terms and Conditions and Help Centre.
I hope you found this guide useful. Stay safe on the road!
Drive safely,
Amanda 💙
(Featured photo: Motorist)
