Why You Should Not Purchase Your Car Insurance Purely Based On Price

In Singapore, it is mandated that all vehicles on the road must be insured with a valid vehicle insurance policy. Each year, this insurance policy needs to be renewed and kept up to date. There is little surprise then that car insurance policies remain one of the most researched car ownership topics year after year. However, as insurance providers all aim for a bigger share of the pie, what seems to have ensued is a premium price war, where insurers are offering lower and lower annual premiums in an attempt to bait bargain hunters. Keep in mind though, that by marketing a lower premium, there is almost always a compromise to be made in other aspects of insurance coverage within the same policy. It is important then that you are well aware of what you are buying, and what works for your car ownership situation.

Generally speaking, dealing with the aftermath of a road accident can be stressful and upsetting for most people. In such situations, you really don’t want to be put in a situation of additional stress caused by the reporting and repair process. Because of this, I have found that one of the most important things to check out before deciding on a particular car insurer, is their list of authorised workshops and reporting centres. These authorised workshops and reporting centres are where you would go and fill out your accident report within 24 hours of an accident. This reporting centre could also potentially be the workshop which you decide to carry out repairs on your own car while claiming third party insurance, which also means that the team running this workshop will be the guys who are helping to coordinate the survey with the third party insurer, submit all the necessary paperwork, and eventually carry out your repairs.

My recommendation is that from the time that you are choosing an insurer, look through the list of authorised workshops and reporting centres and decide if you would actually carry out your car servicing with any of these workshops. Especially if you drive a continental or luxury car, which sometimes call for more specialised equipment, it might be a good idea to see if there is indeed a specialist workshop in that list of authorised workshops and reporting centres. The advantages of servicing your car with a specialist workshop who also happens to be an authorised workshop or reporting centre of your chosen insurer are numerous. I will share these advantages through a personal experience of mine.

When I purchased my used Audi A4 some time ago, I had chosen an insurer that had an Audi specialist workshop in its stable of authorised workshops and reporting centres. From my first service post-purchase, I started to service my car there, and over time, I got to know the service manager quite well. Recently, when I was involved in a minor accident where I was rear ended by a motorcycle, I promptly drove my car into my usual workshop, and carried out my accident reporting with the same service manager whom I knew well. The process was not stressful, mostly due to the fact that I was talking to someone whom I already knew well. I was dealt with like a friend, and not a random stranger. This tone of courtesy and familiarity extended into the coordination of my survey, along with the eventual repairs. My repairs were also promptly carried out, as being a specialist workshop, they had healthy access to Audi original parts either through personal stock or healthy supply chain relationships with their stockists, and did not need for me to “wait for stock to arrive”. Lastly, because of my existing experience with the workshop, I also had confidence that they were not unduly marking up any parts for unreasonable profit, which could have had an impact of the third party accepting liability, and subsequently delaying repairs on my car.

In car insurance policies, it is imperative to understand that there is the policy holder, there are authorised 2nd drivers, and then there are named drivers. In Singapore, where the typical household owns only one car, it is highly likely that we find ourselves in situations where another authorised driver in the family may take the car out for various reasons. During such situations, it is always wise that your insurance policy also covers the car, while it is being driven by a 2nd driver, such as your spouse, child, friend, or relative. While most insurance providers can cater for a 2nd driver in your policy, some of them have already factored them into the premium, whereas some of them will charge an additional premium for this. Also, some insurance providers also have very strict criteria for 2nd driver coverage to take effect, the most common of which, is an age restriction. Depending on your car make, and insurance provider, minimum age restrictions usually stipulate a minimum age of 26 - 29 years of age.

If you are in a situation where the car is used quite evenly between say, you and your spouse, you might want to get an insurance policy that caters for a named driver. Some providers actually provide this free of charge while some will charge an additional premium for this. Named driver status is important in such situations because, in the event of an accident, it allows the named driver to carry out the accident reporting without a letter of authorisation from the policy holder. This is something that a generic 2nd driver status does not facilitate. If you consider that your accident reporting has to be done within 24 hours of the accident, then you’ll understand that the post-accident period is always a mad rush. You’ll have to put aside some pre-planned engagements, shift your schedule around, and attend to the accident report. Imagine if you had to get your spouse to come down to attend to the accident report while he/she is at work, or worse still, overseas! The worst part is, even if the policy holder was available to attend to the accident report, you would still have to be there, as only you would have the accident details and information, which basically means wasting the time of both you and your policy holder. Thus, having a name driver can really help to make life a lot easier in such situations.

When your car has been involved in an accident, and needs to be left in the workshop, there are a few ways that insurance providers help to alleviate this inconvenience. Depending on your car usage and lifestyle, some of these solutions might actually not be so ideal, and see you getting the short end of the stick. Not surprisingly, there is an almost direct correlation between your insurance premium, and the quality of your replacement solution.

On the lower end of the spectrum, your insurance provider will likely claim loss of use on your behalf, for the days that your car is in the workshop. While this does alleviate some financial implications of your car being stuck in the workshop, most of the money you get will likely all be spent on taxis or grab rides. Let’s face it, if you’re used to driving around every single day, it is unlikely that you’re going to hop on a bus or train and get on with your day. I don’t even own an ez-link card anymore. The end result is that your financial alleviation is marginal at best, and you would still be in a rather inconvenient situation without a car.

Majority of the insurance providers will provide a rental car for your use, at the expense of the third party (in the case of a third party insurance claim). However, the quantum provided is usually capped, and usually only adequate for a baseline car like a Honda Jazz or a Mitsubishi Lancer. If you are already driving similar A to B type cars, or are working in an 9am to 5pm office environment where nobody really sees your car, then this won’t be a problem for you. However, if you are driving a luxury car, which you employ as part of your image in a very client-facing job, such as consultancy, insurance, financial advisory, or sales, this situation may present a little bit of inconvenience, or may even seem a bit “xia suay” if you have to drive some of your clients around as part of corporate entertainment. Another situation where this may cause problems, is if you are the type who owns an MPV so that you can ferry 3 kids, your spouse, and your parents around during the day for various reasons. Having a replacement Mitsubishi Lancer to substitute the capabilities of your trusty Toyota Estima is just not going to cut it. Imagine trying to install 3 ISOFIX car seats into a Mitsubishi Lancer. So if you are in a situation where your daily needs are specific and non-flexible, you may want to think about going with an insurance provider who can provide identical replacements.

Lastly, in the case of some insurance providers, they are actually able to provide identical replacements to your car, or at the very least, a car in the same class. In some situations, especially with extremely new cars, the equivalent replacement car may only be attainable from the distributor themselves, and can sometimes even be better equipped, newer, or a high specification version of your own car. Naturally, such excellent insurance coverage comes at a premium, but perhaps not as much as you might expect, depending on the insurance provider. However, if your needs call for it, paying for this coverage might be a good investment.

If you understand that nothing comes free in this world, then this won’t be too surprising to you. Low insurance premiums almost always come with higher excess quantums (against other comparable policies). It is just the way of the world, and you get what you pay for. However, there is actually some wisdom in subscribing to this type of insurance set-up. If you view yourself as a reliable and careful driver, then it only makes sense that you would subscribe to a lower premium, and hedge your bet that it is unlikely for you to have to trigger your own excess clause for repairs on your own car. Another possible scenario is if you have a flexible work schedule, and seldom drive while tired, or seldom get caught in rush hour traffic, then your chances of making a mistake and being liable for an accident on the road (and therefore having to claim on your own insurance to repair your own car as well) can also be perceived to be significantly lower. In such situations, perhaps it works out for you to bite on the lower insurance premium, even if it means having a much higher excess quantum than other policies. That being said, what is important is that you know what you are buying when you are choosing your car insurance, so as not to be caught out surprised, or unnecessarily feel cheated, should you unfortunately get slapped with a hefty excess quantum. The last type of situation where buying a policy with low premiums but high excess, is if you are the type that will never bother about repairing your own damaged car. In which case, more power to low premiums.

The most important thing is to identify and understand your usage needs as a driver, and therefore understanding what are some of the situations that you want to avoid at all cost. By understanding all these factors, you can then begin to choose a policy that suits your needs and helps you to circumvent situations deemed undesirable to you. At the end of day, what you probably want is to make as informed a decision as possible, by considering all the facets of your insurance coverage, and not just the price of the premium.

#Cars #Autos #Insurance #Renewal

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