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How Does the Value of Your Car Influence Insurance Cost?

Owning and driving a car is unquestionably expensive in Singapore, and this fact represents a key reason why so few people – around 11 per cent – do own vehicles in this small country.

As a driver and car owner, it is easy to lose track of at least some of the many small costs you will have, all of which can together add up to massive expenses. The costs can particularly pile on if you are gearing up to buy a new car.

Even when you get the best deal on your car insurance in Singapore, the premium will typically cost at least S$1,500 per year if the driver does not have a no claim discount (NCD).

Singaporean drivers who are considering purchasing a new or used vehicle, and who want to budget responsibly, will be asking themselves how the value of the car they are looking at, in Singapore determined by the Open Market Value (OMV), is going to influence the price of their car insurance policy.

Read on to discover what part this one factor plays when insurers decide the cost of your annual car insurance, as well as to find out what additional factors shape the cost of your car insurance.

What Factors Do Insurance Companies Take into Account When Determining What Your Policy Will Cost?

A variety of factors, relating to you as well as your vehicle, go into determining the total cost of your annual car insurance payment – ultimately because all these variables establish the risk the insurer takes on when they accept you as a client.

Your driving record is an important factor here. New and younger drivers, who do not yet have a proven track record, can expect to pay more for their car insurance.

The same holds true for those drivers who do not have a completely clear driving record as well as those who have recently been in a car accident and made an insurance claim.

These drivers will not be benefiting from a no claim discount (NCD), which can nearly halve the insurance payments of experienced and responsible drivers. Your age and gender also go into determining the cost of your car insurance payments.

More mature drivers are statistically less likely to find themselves in road traffic accidents, as do women.

They, therefore, tend to have somewhat lower car insurance payments. In addition, drivers who rely on their car daily are going to be paying slightly more for their car insurance than those who drive only infrequently.

Your credit score is another factor insurers look at when they determine your annual premium, so those drivers who do have lower credit ratings could attempt to work on improving that if they wish to bring the cost of their car insurance down.

The exact type of car insurance you opt for will also influence the costs you will have to pay, of course. It will be no surprise to drivers in Singapore that third party only (PTO) and third party, fire, and theft (TPFT) policies cost less than comprehensive car insurance, as these more basic forms of insurance also offer fewer benefits.

In addition, optional car insurance add-ons like no claim discount protection and 24-hour breakdown assistance may also cost more.

Not all car insurance companies are the same, however, and that is why to save money and get a better deal, it is so crucial to shop around for the best car insurance in Singapore. That starts by asking for car insurance quotes from at least three different insurers to see who will offer you better value for money.

By carefully evaluating your insurance options, you will, as a driver in Singapore, be able to make significant savings while still being able to benefit from all the features you want and need in your car insurance provider.

How Will the Value of Your Car Influence Your Car Insurance Payments in Singapore?

The value of your vehicle does influence the total cost of your annual car insurance premium, but not only in the way you may think. Of course, should you be in a severe road traffic accident or collision in which your car is totalled, your insurer will be picking up the bill – and the same holds true if your vehicle were to be vandalised or stolen.

Increased repair or replacement costs represent one important reason that cars with a higher market value do tend to be associated with higher insurance costs.

Likewise, luxury and sports cars, which will have an above-average value, are vehicles that can be driven at higher speeds – and often are. As this increases the statistical risk that such vehicles will be involved in an accident, it is no surprise that such high-value cars are more expensive to insure.

However, driving an expensive new car can also, surprisingly, lead to savings on your car insurance. Brand new cars may often have a high Open Market Value, but they will also be equipped with a range of modern safety and security features.

These state-of-the-art features are also taken into account when your insurance company determines the cost of your car insurance payments, as they can reduce the risk of accidents and theft.

Larger cars can, again, be more expensive to buy. Because they also have reduced odds of being totalled in a crash, on the other hand, your insurance payments can be lower.

Regardless of what vehicle you are driving, choosing your insurance company wisely will pay off – so never forget to make a careful comparison between different options as you look for the best car insurance in Singapore. Drivers who are currently considering purchasing a new car can, in fact, factor the cost of their car insurance in.

By obtaining multiple car insurance quotes for all the vehicles that have made it into your shortlist and making a car insurance comparison, Singaporean drivers may, in fact, be able to make smarter decisions about the purchase of their new car.

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