What is Car Insurance?

Figuring out all the complexities of car insurance can be very confusing. We have put together a helpful guide on car insurance plans in Singapore to help you get started.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Mar 12, 2024



The car insurance industry in Singapore can be quite complex, due to its constantly changing premiums and convoluted vocabulary. Below, we’ll guide you through the car insurance basics such as what it is, what it covers and how to get the most out of your car insurance plan.

Table of Contents

Defining Car Insurance

Car insurance is a form of insurance that protects you against medical and liability costs when you get into a car accident. It’s divided into three different types of policies: Comprehensive, Third party Only (TPO) and Third-Party, Fire & Theft (TPFT).

Third party Only (TPO)Third-Party, Fire & Theft (TPFT)Comprehensive
  • Most basic, no frills
  • Protects affected third parties in an accident (death, injury, damage)  
  • Does not include any coverage for you or your vehicle

*Mandatory to have at least Third Party Only (TPO) car insurance.

  • Covers as per TPO 
  • Covers losses (to you) incurred from damages caused by fire and theft 
  • Includes all the benefits listed in TPO and TPFT
  • Covers accidental damage to your own car as well

*Mandatory for car owners that take on a bank loan when purchasing their vehicle.

Starting from 1990, Singapore’s Road And Safety Act made it mandatory to have at least Third Party Only (TPO) car insurance—the cheapest and most basic plan—which covers for only the costs associated with (you) damaging someone else’s car/ property and the associated costs. Third-Party, Fire & Theft (TPFT) coverage expands on TPO coverage by adding protection from losses due to accidental fires and theft. With an average cost of S$841 per year, TPFT plans are a bit more expensive than TPO plans, which on average just S$698 per year.

average cost of car insurance in Singapore

Comprehensive coverage is the most common type of car insurance in Singapore and includes not only third party liability and fire/theft, but also covers losses and damages done to your person, vehicle, passengers and belongings. It can also cover other things like loss of keys and might even provide a courtesy car if your car is in the repair shop or is stolen.

Comprehensive plans are required for those who are getting a new car with a car loan. Payment for all plans is annual with premiums generally changing every year—although you can find some insurers who will sell you a two-year plan with a locked-in premium. The current average premium for a comprehensive plan is around S$1,052 per year for an average sedan.

Related: Compare Car Insurance Plans 

Why You Need Car Insurance

Car insurance is compulsory in Singapore. Hence, regardless of whether you want to or not, you must have car insurance lest you get caught and suffer penalties of fines up to S$1,000 or imprisonment. Besides, having car insurance is a good way to protect yourself from expensive legal fees and medical expenses.

According to data from the 2023 mid-year traffic situation press release from the Singapore Police Force, in the first half of 2023, the total number of traffic accidents resulting in injuries or fatalities increased by 11.8% to 3,542, up from 3,169 in the first half of 2022. The total number of injured persons and fatalities increased by 17.1% to 4,550, up from 3,886 in 2022. Car accidents are more common than most people expect, and making sure you and your passengers are well protected can mean saving big on car repairs, medical costs, lawsuit fees and even damages done to your personal belongings.

Some insurers may even cover for smaller inconveniences, like towing charges and alternative transportation while your car is being repaired. Knowing that help is available in the event of a car accident or mechanical breakdown can offer great peace of mind, especially for young or inexperienced drivers.

Coverage TypeIndustry Average Amount
Personal Accident (Insured)S$28,333.33
Personal Accident (Passenger)S$8,333.33 
Medical ExpensesS$833.33 
Towing ServicesS$375 
Personal BelongingsS$100 
Car AccessoriesS$750 
Loss of Use – Transport Allowance optional add-onS$40/day  
*Information as of Feb 2024.

Related: Best Cheap Car Insurance in Singapore 2024

Car Insurance Policy Structure

Besides offering Third Party Only (TPO) and Third-Party, Fire & Theft (TPFT) plans, insurers also offer several different options of Comprehensive plans. Differences between the Comprehensive plans include premium price, scope of benefits and maximum amount of coverage offered.

The Comprehensive plan’s structure is usually broken down into accidents and repairs, personal accident and liability expenses and optional add-ons. Some insurers provide coverage for loss of use (temporary travel allowance), windscreen repair, car accessory damage and medical expenses as embedded benefits; whereas other insurers might offer these benefits as optional add-ons.

Other optional add-ons include No Claim Discount (NCD) protection, phone assistance and roadside support or personal accident coverage. However, it is important to know you will have to pay a “policy excess” in certain circumstances, meaning you are responsible for a certain amount before your insurer takes over the costs. This is an adjustable amount that may differ due to age or type of claim, but the average excess rate in Singapore ranges between S$600 and S$1,000.

Related: What is a Car Insurance Excess?

How Premiums are Calculated

Your car insurance premium will be based on several factors, ranging from who you are to the type of car you drive.

For car insurance coverage, your premium will be calculated only after you input all of your information, including your age, gender, occupation, years of driving experience, numbers of claims, marital status and demerit points. This is due to the Risk Factor Rating System insurers use to identify the potential risk level of a driver. In general, males, young/inexperienced drivers or those older than 65+ and people who have filed previous claims tend to have higher premiums.

What kind of car you have is also a factor in calculating your premiums. This includes the car make, car model (engine and capacity specifications), car’s age and whether or not it is off-peak or on-peak. An off-peak car is a car that is not driven between 7am and 7pm on weekdays (except on Public Holidays) and usually results in cheaper car insurance premiums. Luxury, on-peak and high engine capacity cars will yield higher premiums due to their parts and time of use.

If you want to save on your premium, you can get a discount of up to 50% if you meet the criteria for a No Claims Discount (NCD). For each number of years where you did not file an at fault claim, your discount increases in increments of 10% up to 50%. Some companies also offer a Safe Driver Discount (Certificate of Merit), which can be stacked on top of your NDC.

Related: Should You Buy No Claim Discount Protector for Your Car Insurance in Singapore?

car oil change mechanic
Source: Unsplash

Notable Exclusions

Some of the main exclusions include driving while under the influence of drugs or alcohol, in a car that has non-approved modifications, not registered under the Road Traffic Act, or is carrying more than the legal limit number of people. Additionally you are not covered for losses due to terrorist attacks, war and riots. Some insurers also exclude physiotherapy as part of their medical expense coverage. You should always read the terms and conditions, especially if you make modifications on your car as insurers may accept some modifications but not others.

Although not an exclusion, you should check to see which auto workshops a particular insurer offers. Some will have a list of preferred workshops while others may let you do car repairs at any. Additionally, there are territorial limits, so you will have to check with the insurer to see if you will still be covered if you drive outside of Singapore (especially for those who drive into Malaysia for road trips).

Related: Is Paying More on Car Insurance to Choose Your Own Workshop Worth It?

How to Pick the Best Car Insurance

Finding the best car insurance for you depends on your budget, your car and the amount of coverage you want. However, just because you are on a budget does not mean it is a good choice to go straight for the cheapest plan, as tempting as it can be.

In some cases, like if your car is over 10 years old, you’ll actually be better off with a TPO or TPFT coverage plan. This is because your car might have depreciated in value to the point where a bare minimum basic plan will do. However, in most circumstances getting a more comprehensive plan (paired with some cost saving measures such as being a safe driver, utilising your NCD and comparing car insurance offerings) can be a life-saver.

You can also find a policy based on your needs and lifestyle. For example, If you tend to drive in West Malaysia or Southern Thailand, you can find a plan that covers those territories. If you have a family, you can opt for a plan that is generous with personal accident and medical coverage and includes your passengers.

Consumers should make informed and calculated decisions by collecting more information on a product, looking at all the facts, and making prudent comparisons. If you would like further information on how to navigate the car insurance space, you can read our guides to help you compare and find the best car insurance plan.

If you are ready to purchase a car insurance policy, compare the best car insurance polices on the market here. Alternatively, you can check out all the best insurance policies across all different types of plans here

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Cover image source: Unsplash

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