The Essential Guide to Car Insurance Premiums

The manner in which insurance companies go about calculating car insurance premiums is a lot less complicated than people tend to believe.

Your motor insurance premium is not determined by a complex mathematical algorithm, but through a simple combination of various factors that come under two main categories.

The Vehicle Driver Profile

I. The Vehicle

1. Type of CarGenerally, those who drive sedans or station wagons might have to pay lower insurance premiums than those who own SUVs or high performance sports cars.

Simply put, a Toyota Corolla or a Honda Civic could be cheaper to insure than a Ferrari Enzo.

2. Engine Type and CapacityLarger car engines generally attract higher insurance premiums. The same goes for turbocharged engines as well.

Thus, the owner of a Ford Endeavour SUV might end up paying a higher premium than the driver of a Mazda hatchback.

3. Year of manufactureThe older one’s vehicle, the lower the premium tends to be. However, a number of car insurance companies do not offer comprehensive protection for vehicles that they judge to be too old.

4. Vehicle Scheme – Normal/ Off PeakSome motor insurance providers offer a small discount on premiums for Off Peak Cars.

II. Driver Profile

1. Age and GenderThis is one of the major factors that providers take into account when calculating one’s car insurance premium, as demonstrated in the table below. Generally, the older the person, the lower his or her insurance premium tends to be.

Age Groups and Descriptions

18-21 Years: This age group pays the highest premiums22-25 years: Expensive, but lower than the 18-21 bracket26-30 years: Moderately expensive31-65 years: Usually pay the lowest car insurance premiums

With regards to gender, female drivers usually have to pay lower insurance premiums than males.

2. Marital StatusCar insurance premiums are generally lower for drivers who are married.

3. Driving Experience (calculated from the time one receives a driving license)This is another major factor in the premium calculation process. Generally, more experienced drivers pay lower car insurance premiums.

Experience and Descriptions:

0-1 year: The most expensive group owing to lack of driving experience1-2 years: Slightly more experienced, and therefore less expensive2-4 years: Moderately expensive premiums4+ years: Usually pay the least expensive premiums

4. Driver’s Occupation Type – Indoor or OutdoorThose who have ‘indoor’ jobs tend to pay less than those who have ‘outdoor’ jobs.

5. No Claim Discount (NCD)If you have not made any claims during your policy year, you are entitled to a 10% NCD. This lowers the car insurance premium that you must pay when you renew your policy for the following year.

Note: You can accumulate a 10% NCD in this manner for every successive claim-free year up to a maximum of 50%.

6. Certificate of MeritIf you have neither committed any traffic offenses nor gotten any demerit points in the last 3 years, you are entitled to a 5% discount (in addition to your NCD deduction).

7. Driver’s Claim History

Those with a claims history that exceeds S$5000 may find it difficult to obtain car insurance cover. While providers do not always reject drivers with a substantial claims record, they do tend to impose higher insurance premiums instead.

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