Cheap Car Insurance Policy Is Not Always The Best

Being Singaporeans, we often find ourselves trying our very best to spend the least we can and yet get the best deal out of it. However, not in every area is this possible. One such example is cheap car insurance policy. You do not get the best with the cheapest, and Lorna Tan, Senior correspondent of The Straits Times have learnt her lesson for acquiring a cheap car insurance cover.

As we all know, Insurance is part and parcel of our daily lives. Be it insurance for our lives, health or education, we need insurance to give us a sense of security. On top of that, it is also compulsory to buy car insurance for those who wish to drive in Singapore.

During the renewal of Lorna’s husband’s motor policy in January, she chose to pay the minimal sum for the best motor insurance cover. Also, based on their good track records, Lorna dismissed all considerations of paying an additional premium to protect her husband’s Non-Claim Discount (NCD), as she thought that the chance of any car insurance claim was slim.

Non-Claim Discount (NCD) is a privilege that reduces the premium for the following year, and given to those who have not made a claim for a year or more. For example, after 1 year in which no claim is made, your car insurance premium is reduced by 10%, after 2 years, it is reduced by 20%, and so on and so forth.

Once you have accumulated a 50% NCD, you may be allowed to buy protection against the loss of your NCD, depending on your insurer. By paying a small amount of extra premium, you can make the first claim during the year without worrying about entirely losing your 50% NCD.

Without the NCD protector, her husband is likely to have a reduction of his NCD from 50 percentage points to 20 per cent for the following year’s renewal due to the claim on her husband’s policy. In addition, her husband can also expect a possible loading on the renewal premium, depending on the amount of the claim and the degree of the driver’s liability in the accident.

To add on, another benefit that Lorna regretted not buying was lost-of-use benefit – use of another car while her husband’s was in the workshop. It would have only cost her $95, but she didn’t buy it.

Paying less does have its advantages and disadvantages doesn’t it? Weighing the consequences will definitely help one to make right choices next time. Cheap car insurance may sometime be good, but it is not necessarily the best.

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