How to Lower Your Car Insurance Premiums: A Definitive Guide

Car insurance is a mandated insurance in Singapore if you are going to drive.

Just like any other insurance, car insurance can be pretty complex. Unless you are a millionaire, the one thing that is at the top of your mind should be about car insurance is the insurance premium.

In this article, we will break down the factors that affect the premiums of car insurance, and how you can lower car insurance premiums.

Factors Affecting Car Insurance Premiums

The amount of your car insurance premiums is affected by three main factors: Personal, Vehicle, and Insurance.

Personal Factors

The purpose of car insurance is to reimburse damages that are caused by the insured. The biggest risk factor to the insurer is you – the driver. Insurer will assess you based on:

  • Your age: Car insurance premium decreases as you aged (assume other things being equal). Insurance companies assume that young drivers, especially those who just got their licenses, are more dangerous. Also, the older you are, the assumption is that you will be more risk averse in comparison to the younger you.

  • Your driving record: Driving record is important as it shows that you are a safe driver with clean driving records. This is the greatest assurance to the insurance company for them to lower their insurance premiums.

  • Your Gender: Females are believed to be a safer driver than male. Some insurers will charge a higher premium if you are male.

  • How much do you use your car: The longer you stay on the road, you will have a higher chance of causing an accident. If you are using OPC (off-peak car), you may be able to obtain a discount from your insurance company.

  • Your job: If your job requires you to stay indoor, like for e.g. an accountant, the premium will be lower. This is related to how much are you likely to use your car.

  • Your claims records: Usually the insurance companies would want to have the past 3 years claims records and this would determine if you have any
    history of claims. The higher your past claims amount, the higher your insurance premiums.

Vehicle Factors

The next group of factors is vehicle-related.

Insurance companies need to know how expensive is your car, and how much does it cost to service it. Of course, the more expensive your car is, the higher is your insurance premium.

The type of car counts as well. Should you be driving a sports version of the model, you will be subject to higher premiums in comparison to the normal sedan version.

Insurance Factors

Finally, your insurance premium is affected by the coverage you want.

Types of Motor Insurance

There are 3 types of motor insurance available in the market:

  • Third-Party Coverage: This is the cheapest form of insurance. The coverage only applies to the other party involved in the accident. For example, if you knock into someone else’s car, the insurance will only compensate his damage, but not yours.

  • Third-party, fire and theft: This include damages to your car due to fire, or you lost your car due to theft, in addition to third-party coverage.

  • Comprehensive: Despite its name, comprehensive car insurance does not cover everything. It includes the coverage of third-party, fire and theft, death or injury of the insured and third-party, damages to other parties’ properties, and medical expenses. This is the most expensive but the most common type of coverage of all three types of motor insurance.


The three types of car insurance also come with add-ons which you have to pay additional for. Some of the more common add-ons are:

  • Windscreen damage

  • Liability of passengers when they are negligent

  • Personal accident benefits for passengers

  • Preferred Workshop Option

  • No claim bonus protection

A no claim bonus (NCB) or no claim discount (NCD) is a bonus awarded by the insurance company when you did not make any claim for the past year. It is given as a discount on your insurance premium, up to a maximum of 50%.

A no claim bonus protection allows you to claim from the insurance company for a pre-specified number of times without affecting your NCB.


Excesses refer to the amount you have to pay before the insurance company makes the payment. For example, if your excess is $300, and your repair cost is $1,000. You will have to pay $300 and the insurance will take care of the remaining $700.

The higher your excess, the lower is your insurance premium.

Number of Drivers

You can include more drivers under the same policy. Typically, the more drivers you included, the higher is your insurance premium.

How to Lower Your Car Insurance Premiums

You have now understood the factors affecting the car insurance premiums. At this point, you may still have one question on your head:

“How do I find the cheapest car insurance?”

Before you go on to buy third-party car insurance because you see that it is cheapest, the best way is to assess what are your needs.

Understanding What Coverage Do You Need

Most banks require their auto loan borrower to take up comprehensive car insurance. If you took auto loans to service your purchase of your car, then you pretty much do not have a choice. You just have to buy a comprehensive car insurance.

You will also have to assess your usage to decide the coverages that you need. Please feel free to contact us for a free consultation if you need help on this.

Maintain a clean driving history with no demerit points

Insurance companies will be wary when you break the traffic rules. By showing to the insurance company that you have a clean driving history without any demerit points, you are likely to get lower premiums in subsequent years.

Your claim history

Related to clean driving history, if you did not make any auto insurance claim before, you would enjoy the NCB discount, resulting in lower insurance premium.

Note that claim history does not include if the other party is at fault during the accident, causing damages to your vehicle.

Negotiating for higher excesses

Not all insurance policy terms are cast in stone. You can always try to negotiate for a higher excess amount in return for a lower premium.

Having a higher excess also indirectly help you in your claim history. For example, if your excess is $2,000 and your damage is $500, there is no point for you to submit the damage report to your insurance company.

Only negotiate for higher excesses if you are confident that you can make the excess payment when the accident happen.

Plan Ahead

Finally, do not leave till the last minute to buy auto insurance. Having more time for you to search and negotiate the terms gave you a considerable advantage.


Car insurance, like any other insurance, can be pretty complicated. Understanding the factors that influence car insurance premiums can help you plan how to get cheaper car insurance.

With careful planning, with a safe driving record, you will keep the cost of car insurance low. It is often advisable to compare different quotes and policies. If you would like a free consultation and quotation of car insurance, please contact us. We love to talk to you!

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