What is a Car Insurance Excess?

Are you a new car owner looking to buy car insurance for the first time? Decoding car insurance jargon can be confusing. We explain what exactly is car insurance excess and how much you should expect your excess to be on your car insurance policy.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Feb 27, 2024

saleswomen infront of a car in carpark

One thing all car insurance policies have in common is having an excess (or two). However, despite its prevalence in car insurance policies, the car insurance excess can still cause confusion for some policyholders.

Below, we break down what the types of car insurance excesses you may come across and how they can affect your claims.

Related: Average Price of Car Insurance 2024

car accident
Source: Unsplash

What is an Excess?

When you purchase a car insurance policy, you’ll notice that an excess applies for several types of claims. An excess is a deductible, or in other words, the amount of money you have to pay out of pocket before your insurance policy will step in and cover the rest of the claim. For instance, if your car gets damaged and the cost to repair it is S$3,000 and you have a S$700 excess, you will pay the first S$700 out of pocket and the remaining S$2,300 will be paid by your insurer.

Excesses are implemented to prevent drivers from claiming for every small mishap that happens to their car so as not to cause a widespread increase of car insurance premiums. There are three main excesses that you will come across in a standard car insurance policy in Singapore: the Standard Excess, Young/Inexperienced Driver Excess and Windscreen Excess.

Standard Excess

The standard excess applies to claims relating to the loss or damage of your car. This means you will have to pay a certain amount out of pocket if your car was damaged, lost or stolen, or if you need your car or any of its accessories replaced. The standard excess is usually not applicable if the damage was due to fire or theft.

Unlike the other types of car insurance excesses, you have the option of choosing the standard excess amount when purchasing or renewing your policy. Typically, the default car insurance excess is between S$600 and S$700, although you have the option of changing your excess to anywhere from S$0 to S$2,500.

Young or Inexperienced Driver Excess (YIDR)

Young drivers in their early 20’s or drivers with less than 2 years of experience will be subjected to a Young/Inexperienced Driver (YIDR) excess. It will be a set sum (meaning you can’t change the excess amount) and will be added on top of your standard excess.

Typically, the YIDR excess is quite large—often between S$1,000 and S$2,500—mainly because insurers see younger and inexperienced drivers as higher risk. Since this is a large sum to be responsible for, you may benefit from finding an insurer that lets you add an option young rider excess waiver for an extra fee to avoid paying these high out of pocket costs.

How the YIDR Excess Works
Total Cost of RepairsS$5,000
Standard ExcessS$700
YIDR ExcessS$2,500
Total Excess ResponsibilityS$3,200
Insurance Company Pays:S$1,800

Related: Best Cheap Car Insurance for Young Inexperienced Drivers 2024

Windscreen Excess

The windscreen excess is a standard feature for most car insurance policies in Singapore. It is the amount you’ll be responsible for if you have to claim for windshield damage or replacement. The average windscreen excess is S$100, although some insurers may charge a smaller excess (for instance, S$25) if the windscreen only requires repair. Some insurers may also change the excess amount depending on which workshop you use. For instance, some insurers may not charge you an excess at all if you use their approved workshop for windshield repairs.

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

man driving
Source: Pexels

How Much Excess Should You Choose?

What your standard excess should be depends on whether you prefer to pay cheaper premiums or have less out of pocket costs. This is because the standard excess you choose changes your total premium—the lower the excess, the higher your premium will be and vice versa.

We found that on average, your annual premium increases between S$10 and S$20 for every S$100 excess decrease. Thus, if you don’t mind paying a bit extra per year on your premiums, then you may be able to save hundreds of dollars in out of pocket costs should you get into an accident.

Do Other Insurance Policies Have Excesses Too?

Car insurance policies are far from being the only type of insurance to make policyholders pay an excess. For instance, motorcycle insurance policies have similar excess obligations, including a standard excess and a young rider excess. You may also come across excesses in home insurance and domestic worker insurance. However, you should note that unlike car and motorcycle insurance policies, excesses in other insurance policies are not as widespread and may only be found with a couple of insurers.

Below, we have listed some examples of excesses we’ve come across in different insurance policies. To ensure you won’t be surprised with out of pocket costs regardless of which insurance policy you are buying, you should always read the policy wording.

Examples of Excesses in Other Insurance Policies

Type of ExcessAverage Amount
Motorcycle Insurance
Standard ExcessS$300-S$750
Young/Inexperienced Rider ExcessS$300-S$500
Home Insurance
Contents Excess (Force Majeure Claims)S$200-S$350
Bursting Water Tank ExcessS$200
Domestic Worker Insurance
Outpatient Medical Expense ExcessS$10

As a consumer, you should always aim to make informed and calculated decisions by collecting more information on a product, looking at all the facts, and making prudent comparisons before purchasing a policy.

If you are interested in shopping around for the best car insurance policies, submit an enquiry here today or browse all the best insurance policies on offer over on AMTD PolicyPal

Find The Best Car Insurance PlansFind Out More

Read More:

Cover image source: Pexels

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Site constitutes a solicitation, recommendation or endorsement by AMTD PolicyPal Group in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Under AMTD Digital, AMTD PolicyPal Group consists of PolicyPal Pte. Ltd., Baoxianbaobao Pte. Ltd., PolicyPal Tech Pte. Ltd., and ValueChampion.