Every now and then, there are people in the forum asking about how car insurance premium comes about and which insurance company to choose from so I decided to share a little about what I know.
How premium is calculated
Premium is calculated based on the follow factors
1) Age Group This is car owner's age. Most company has similar age group factor
18 to 21 - Most Costly ( Due to highest claim ratio from this group )
21 to 25 - Still Costly
26 to 30 - Affordable
31 to 55 - Cheapest
55 Onwards -Premium increases with age
2) Driving Experience This refers to how long did you get your driving license and has nothing to actual driving experience. This is measured in number of years
0 to 1 - Very Expensive
1 to 2 - Still Expensive
2 to 4 - Affordable
more than 4 - Least painful on the wallet
3) Job occupation (Indoor/Outdoor) This refers to the nature of work, like desk bound or sales
Indoor - cheaper
Outdoor - more expensive
4) Martial Status
Married - Cheaper ( Perhaps due to more responsibility so drive safer )
Single - More expensive
5) NCB (Discount No Claim Bonus) rewards you for not making any claims. You receive 10% NCD every year.The maximum NCB that you can get 50%.
For example, your car insurance cost $2000 (before NCB) and you have 40% NCB, your premium would be $1284 {[2000 - (2000 * 40)] * 1.07} with GST. Hence the higher the NCB the lower your premium
6) NCB Protector This is application to people with 50% NCB, in the event of 1st accident in that policy year, your NCB will remain as 50%. After which, the 2nd accident will cause your NCB to be reduce to 20% (50% - 30%) . If you super unlucky and have the 3rd accident in a year your NCB will be reduced to 0% (20% - 30%, you cant get -10% so it will be 0%)
It is important to note that NCB protector is only effective if you renew your car insurance with the same insurance company. If my car insurance is with company A and my NCB is 50%, after the 1st accident (and it's my fault) , I still get 50% NCD as I got the NCB protector upon the renewal. However, instead of renewing my insurance with company A, I go with company B. I will only be entitled to 20% NCB.
7) Safe Driver Discount This is an additional 5% discount if you do not have any traffic offense or demerit point for the past 2 years. You only get this additional 5% when you have minimum 30% NCB.
For example, your car insurance cost $2000 (before NCB) and you have 30% NCB and safe driver discount, you premium would be $1423 {[2000 - (2000 * 30%)] * 0.95 * 1.07} with GST.
8) Engine Capacity (cc) This refers to your car engine in cc, the lower the cc the lower the premium
9) Year of Manufacture This generally means the year which your car is made/register. For different company the premium might increase or decrease with age of the car.
10) Body Type This general means the type of car like saloon, MPV, SUV. Some company will charge more for certain type of vehicle.
11) Engine Type This usually refers to normal or turbo car engine, It's important to know that most car insurance company impose higher car insurance premium on turbo cars. Some insurance even reject cars with turbo engine.
12) Gender This is company dependent. Some company charge cheaper for male driver while some company charge female cheaper. Yet for some other company is the same rate. I think it's base on individual company statics.
13) OPC Car OPC also know as Off peak car (red plate). Some company give 5% discount for OPC (eg. NTUC) while other company gives same treatment.
These are the website that you can go for online premium quotations.
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Moderator
Personally I recommend looking around at a few insurance companies before diving in to commit the premium for the year. The clause of the contract is always changing so do remember to find out what you are covered before signing. You won't want to think you are getting great value just because the premium is cheap. Wait till cannot claim then cry;
