Car Insurance

So, You've Gotten Into a Car Accident. Here's How It Will Affect Your Insurance Policy.

Car accidents can take a toll on you physically, emotionally, and financially. But how will it affect your car insurance policy? We explore below.

Getting into a car accident can be a physically and emotionally traumatizing event. Besides this heavy toll, it can also be damaging to your finances. This is because a car accident is no cheap event—you will need to pay for medical care, car repairs, any legal fees and other miscellaneous costs. Furthermore, your car accident may lead to a case where your insurance claim may get rejected or you might have to pay larger premiums when you renew your car insurance policy. Below, we've listed how an accident can affect you, ranging from your medical care to your insurance policy—and what you can do about it.

Follow the Protocol After a Car Accident To Avoid Insurer Troubles

The open road is becoming safer in Singapore, there is still a risk of getting into a car accident. If this happens, there is a specific protocol you must follow to ensure troubles with the law and your insurer.

First, you must call emergency services, your insurer and exchange details with the other driver. Second, you should take photos of the scene, like any vehicle damage, license plates, skid marks, lane markings, debris and provide dashcam footage. If there are casualties or persons requiring medical care, you must call for the ambulance or police and be sure not to move bodies, injured persons or vehicles. If you're the one injured, you will need to remain on the scene and get ready to file a medical claim, either with your health or car insurer (provided they offer personal accident or medical benefits). All claims will need to be submitted within 24-hours of the incident.

Your Car Insurance May Cover Personal Accident and Medical Costs

If you have a Comprehensive car insurance policy, you should have coverage for personal accidents and medical costs. This can be very useful since medical costs can be high after a car accident, ranging from around a thousand dollars for minor injuries to tens of thousands for serious conditions like brain injuries. Since medical expenses benefits are usually up to a certain limit, you can use them to fill in coverage gaps left by your health insurer or MediShield Life.

Average Cost of Treating Common Car Accident Injuries

This table shows the average cost of treating common car accident injuries, like spinal and hand fractures, headaches and other head injuries

Personal accident coverage is slightly different and will payout based on the severity of your accident. So for instance, you will receive 100% of the benefit if you permanently lose sight in both eyes, but 50% of the benefit if you lose sight in only one eye. Filing a claim under either of these benefits will not affect your NCD.

Your Claim May Not Always Get Covered in Full

Depending on the type of accident you get into, you may have to pay an excess (an out-of-pocket cost you must pay before your insurer covers the rest of the claim) or your claim will be denied. Each circumstance will be assessed on a case-by-case basis, so even in small accidents, it is usually better to file a claim than to settle privately. However, if you do settle the claim privately, you should make sure you submit a private claim settlement form to your insurer. In most cases of private settlements, your NCD will not be affected.

That being said, there are certain cases where your claim will be denied outright. For instance, if you are found to have been under the influence of drugs or alcohol, your claim will be rejected. Similarly, your claim will also be rejected if your car was found to be in not road-worthy condition, if your car accident was caused because you were committing a crime or if you were being negligent.

General Exclusions

To give your claim a higher chance of being successful, remember to carefully read your policy document, submit all your documents, and include support where applicable (ie, an accident sketch plan or images of the accident). If your claim was rejected and you would like to appeal the decision, you should first understand why your claim was denied. If it's because of a lack of evidence, you can appeal to the insurer directly. If your claim continuously gets denied or it is not due to a lack of evidence, you may have to appeal to the Financial Industry Disputes Resolution Centre.

Your Annual Car Insurance Premiums Could Increase

If the car accident was your fault, then your premiums may increase when you renew your policy. This is true even if you only damage your own car, like if you hit a fire hydrant. Furthermore, your No Claim Discount (NCD) may drop as well, which will reduce the discount you've been enjoying on your premiums. That being said, your car insurance premiums usually won't increase if the accident was not your fault, in situations where your car broke down and you needed roadside assistance, or if your windscreen got damaged.

This graph shows how the average car insurance premium changes depending on the number of claims a driver has submitted in the last 3 years.

If you make an at-fault claim following an accident, your annual premiums could increase anywhere from S$24 to S$300, depending on which car insurance policy you have. Moreover, if you have two claims where you're at fault, you could see a spike of S$1,000 or more in your annual premiums and your NCD may drop back down to zero.

Take Advantage of Safe Driver Benefits To Reduce Accident-Related Costs

If you've been a safe driver all your life and you want to protect your hard-earned premium discounts, you should consider adding an NCD Protector benefit next time you renew your car insurance policy. For example, DirectAsia's NCD Protector will "protect" this discount even if you get into an accident where you are at fault (unless you were under the influence of drugs or alcohol). In any case, make sure to check your car insurance policy wording to know the extent that your discount will be protected.

Type of Claim vs Average Annual Increase

Without an NCD Protector, you would lose your discount after at-fault accidents. This means you would have to spend years without any accidents to reach your previous discount levels. The small, additional cost of S$100-S$150 in your annual premium could end up saving you hundreds of dollars on your premium when you renew your policy in the year after you've had an accident. Thus, this feature can be a saving grace for drivers who have spent years practicing safe driving but got into an accident where it was determined that they were at fault.

While It's Impossible to Prevent Car Accidents Entirely, Practice Safe Driving For Your Health and Your Wealth

Car accidents can happen, and at the end of the day, the most important thing is your recovery. While it's impossible to prevent accidents, the best thing you can do to reduce your risk is to be a safe driver. Not only will driving safely decrease your chances of dealing with costly accident-related medical issues, but you will save money every day in a myriad of ways from saving on petrol to paying cheaper insurance premiums and enjoying insurer discounts.

Anya Wasserman

Anya is a Research Analyst for ValueChampion who focuses on loans and investments in Singapore. Previously, she assisted global consultancies, hedge funds and private equities with primary research at a high-growth fin-tech based in London. A graduate of the University of Oxford and King's College London, Anya is currently interested in applying quantitative research to help consumers make better financial decisions.

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