Local News: Aviva Looks At Insurance Myths

Many local car owners are confused by conflicting information and myths on car insurance, particularly about how premiums are calculated and the level of coverage they are enjoying. To help customers better understand how car insurance works, Mr Andrew Tait, Head of General Insurance at Aviva Singapore, sheds some light on the common myths and the realities of car insurance.

[B]Myth: Red cars are charged higher premiums than other coloured vehicles[/B]

This myth may have come about because red is associated with danger, and there are many red sports cars on the road. In reality, insurers do not ask for the colour of your car. However, relevant details that influence the premiums of your car insurance policy include the make and model of the vehicle, age of vehicle, use of vehicle, as well as driving experience and claims history of the driver.

[B]Myth: My car insurance policy only covers me in Singapore.[/B]

Most car insurance policies actually cover Malaysia and Thailand too. If one frequently drive to neighbouring countries, one should pay attention to the different terms of coverage from different insurers to find out which policy works best for you.

[B]Myth: All car insurance policies are the same. I only have to choose the cheapest one.[/B]

That is definitely not true, and not all car insurance policies are the same. The terms and amount of coverage differ significantly from insurer to insurer. For example, some policies only cover damages to the car, but not medical expenses one might incur in the event of an accident. There could also be differences in the deductible or ‘excess’ of the policy, that is, the amount to bear before the coverage kicks in. (For example, if your deductible is $500, and the bill comes up to $6,000. Driver will bear $500, and the insurer will pay the remaining $5,500.)

Service level is another aspect that will differentiate insurers from each other. For instance, in the event of an accident, it would be helpful if your insurer is able to arrive on scene to provide advice on next steps, as well as take care of your vehicle if it cannot be driven. Emergency roadside assistance – such as help with a flat tyre – is also a value-added service that some insurers may provide.

Of course, cost is also a factor for consideration for most of us. Shopping around and comparing quotes would be the wise thing to do, but when comparing cost, one should ensure to compare costs for the same type and level of coverage.

[B] Myth: If my car is damaged in an accident and cannot be driven, my insurer will provide me with a replacement car while my car is getting repaired.[/B]

This is not necessarily the case, as not all insurers include this feature in their policy. Some might provide a transport allowance instead of a replacement car. Additionally, there will also be variants in the maximum number of days that insurers will reimburse you for transport or provide a replacement car, as well as the type of replacement car or amount of reimbursement. One will need to check the terms of coverage of the policy.

[B]Myth: There are now insurers who allow me to buy and manage my car insurance online. But it’s too much hassle.[/B]

The online platform actually offers convenience and efficiency. It is available 24/7. Users can browse through the available options and get a quote easily, with no pressure to buy. For example, it takes only 60 seconds to generate a quote, and 5 minutes to get covered, on aviva.com.sg. There is also a customer hotline available to assist with any queries one might have, or take care of the claims process for the client. Moreover, online providers are able to offer significant cost savings because of the low-cost model they are operating on.

However, buying insurance online certainly isn’t for everybody. For products that are more complex, or if guidance is prefered, one may find that a financial advisor is a better option.

[B]Myth: If I get into an accident that’s not my fault, my NCD can still be affected.[/B]

Different insurers differ on this. One will need to check the terms of coverage in your policy.

[B]Myth: Anyone can drive my car and be covered if I have comprehensive coverage.[/B]

You will need to check the terms of coverage of your policy. You may be covered for unnamed drivers, but there may be limitations, such as the age and driving experience of the unnamed driver. For example, some insurers will either not cover, or impose an additional excess, if the unnamed driver is below a certain age or has driving experience below a certain number of years.

[B]Quick facts – Claims experience from Aviva Singapore [/B]

Here are some statistics on car accidents in Singapore, based on reported accidents and claims submissions to Aviva’s car insurance:

About 1 in 5 cars in Singapore get into an accident and report it

25% of all reported accidents happen on expressways, followed by 14% in car parks

More accidents happen on the Pan Island Expressway (33%) than any other expressway

On the PIE, motorists are more likely to get into an accident when travelling towards Changi (57%) than in the other direction

The top 10 accident-prone roads are (not in order):
- Bukit Timah Road
- Lentor Avenue
- Upper Serangoon Road
- Thomson Road
- Upp Thomson Road
- Orchard Road
- Scotts Road
- Braddell Road
- Clementi Road
- Yio Chu Kang Road

Credits: wilswong