How premiums for car insurance is calculated
Premium is calculated based on the following factors
1) Age Group This refers to the age of the car owner. Most company has similar age group factors.
18 to 21 - super expensive
21 to 25 - quite expensive
26 to 30 - a bit expensive
31 to 65 - safe zone
2) Driving Experience This refers to how long have you had your driving license and has nothing to do with your actual driving experience. This is measured in number of years.
0 to 1 - super super expensive
1 to 2 - super expensive
2 to 4 - quite expensive
more than 4 - safe zone (most insurance companies will charge the lowest rate for drivers with 4 or more years of driving experience, though some other insurance companies will give the lowest rate for drivers with 3 or more years of experience - eg. OAC under Great Eastern)
3) Job occupation (Indoor/Outdoor) This refers to the nature of work such as desk bounded jobs or sales jobs.
Indoor - cheaper
Outdoor - more expensive
4) NCB Discount This refers to No Claim Bonus discount or some insurance companies may term it as NCD (No claims Discount). You will get 10% NCB for every year which you do not have an accident. The maximum NCB that you can get is 50%.
For example, your car insurance premium cost $2000 (before NCB) and you have 40% NCB, your premium would be $1284 {[2000 - (2000 * 40)] * 1.07} with GST. Hence the higher the NCB, the lower your premiums will be.
5) NCB Protector This is applicable to people with 50% NCB. In the event of 1st accident in that policy year, your NCB will remain at 50%. After which, the 2nd accident will cause your NCB to be reduced to 20% (50% - 30%) . If you are very unlucky and meet with a 3rd accident in a year, your NCB will be reduced to 0% (20% - 30%, you cant get -10% so it will be 0%)
It is important to note that NCB protector is only effective if you renew your car insurance with the same insurance company. If your car insurance is with company A and your NCB is 50%, after the 1st accident which is due to your fault, you will still get 50% NCD as you got the NCB protector upon the renewal. However, instead of renewing my insurance with company A, you go with company B, you will only be entitled to 20% NCB.
6) Safe Driver Discount This is an additional 5% discount if you do not have any traffic offense or demerit points for the past 2 years. You only get this additional 5% when you have a minimum of 30% NCB.
For example, your car insurance cost $2000 (before NCB) and you have 30% NCB and safe driver discount, your premium would be $1423 {[2000 - (2000 * 30%)] * 0.95 * 1.07} with GST.
7) Engine Capacity (cc) This refers to the capacity of your car engine in cc. The lower the cc, the lower the premium.
8) Year of Manufacture This generally means the year which your car is made/registered. Generally, the older the car, the cheaper the premium
9) Body Type This refers to the type of vehicles such as saloon, MPV, SUV etc. Some insurance companies will charge a higher premium for a certain type of vehicle.
10) Engine Type This usually refers to normal or turbo car engine, It's important to know that most car insurance company will impose a higher car insurance premium on turbo cars. Some insurance companies will even reject cars with turbo engines.
11) Gender This is dependent on different insurance companies. Some insurance companies will charge a lower premium for male drivers while others will charge a lower premium for female drivers. For some other companies, the rate remains the same.
11) OPC Car OPC also know as off peak car (red plate). Some companies give a 5% discount for OPC (eg. NTUC) while other companies does not.
Premium is calculated based on the following factors
1) Age Group This refers to the age of the car owner. Most company has similar age group factors.
18 to 21 - super expensive
21 to 25 - quite expensive
26 to 30 - a bit expensive
31 to 65 - safe zone
2) Driving Experience This refers to how long have you had your driving license and has nothing to do with your actual driving experience. This is measured in number of years.
0 to 1 - super super expensive
1 to 2 - super expensive
2 to 4 - quite expensive
more than 4 - safe zone (most insurance companies will charge the lowest rate for drivers with 4 or more years of driving experience, though some other insurance companies will give the lowest rate for drivers with 3 or more years of experience - eg. OAC under Great Eastern)
3) Job occupation (Indoor/Outdoor) This refers to the nature of work such as desk bounded jobs or sales jobs.
Indoor - cheaper
Outdoor - more expensive
4) NCB Discount This refers to No Claim Bonus discount or some insurance companies may term it as NCD (No claims Discount). You will get 10% NCB for every year which you do not have an accident. The maximum NCB that you can get is 50%.
For example, your car insurance premium cost $2000 (before NCB) and you have 40% NCB, your premium would be $1284 {[2000 - (2000 * 40)] * 1.07} with GST. Hence the higher the NCB, the lower your premiums will be.
5) NCB Protector This is applicable to people with 50% NCB. In the event of 1st accident in that policy year, your NCB will remain at 50%. After which, the 2nd accident will cause your NCB to be reduced to 20% (50% - 30%) . If you are very unlucky and meet with a 3rd accident in a year, your NCB will be reduced to 0% (20% - 30%, you cant get -10% so it will be 0%)
It is important to note that NCB protector is only effective if you renew your car insurance with the same insurance company. If your car insurance is with company A and your NCB is 50%, after the 1st accident which is due to your fault, you will still get 50% NCD as you got the NCB protector upon the renewal. However, instead of renewing my insurance with company A, you go with company B, you will only be entitled to 20% NCB.
6) Safe Driver Discount This is an additional 5% discount if you do not have any traffic offense or demerit points for the past 2 years. You only get this additional 5% when you have a minimum of 30% NCB.
For example, your car insurance cost $2000 (before NCB) and you have 30% NCB and safe driver discount, your premium would be $1423 {[2000 - (2000 * 30%)] * 0.95 * 1.07} with GST.
7) Engine Capacity (cc) This refers to the capacity of your car engine in cc. The lower the cc, the lower the premium.
8) Year of Manufacture This generally means the year which your car is made/registered. Generally, the older the car, the cheaper the premium
9) Body Type This refers to the type of vehicles such as saloon, MPV, SUV etc. Some insurance companies will charge a higher premium for a certain type of vehicle.
10) Engine Type This usually refers to normal or turbo car engine, It's important to know that most car insurance company will impose a higher car insurance premium on turbo cars. Some insurance companies will even reject cars with turbo engines.
11) Gender This is dependent on different insurance companies. Some insurance companies will charge a lower premium for male drivers while others will charge a lower premium for female drivers. For some other companies, the rate remains the same.
11) OPC Car OPC also know as off peak car (red plate). Some companies give a 5% discount for OPC (eg. NTUC) while other companies does not.
There are a few implications about this factors. Firstly, one should always try to secure a driving licence as early as possible since the number of years that you had your licence irregardless of your actual driving experience plays a part in the premiums. Secondly, it is advisable to get a car after 30 since any age below the age of 30 will result in an increased premium. Thirdly, getting a car with a lower engine capacity will not only lower your insurance premiums, but it will also result in a lower road tax, resulting in savings for both areas.
Posts
Enlightening.
ReplyDeleteVery informative to all car owners out there!
ReplyDeleteCar insurance is for the birds.
ReplyDelete