The Importance of Understanding Motor Insurance

clifford chow
14 Feb 2019

All of us know that motor insurance is a must-have when owning a car, without it, you will not be able to renew your road tax, or just simply own a car to drive under your name. But while the buying process has been greatly simplified over the last decade, we cannot ignore the importance of the type of coverage you are getting.

Some of us may resolve small incidents on our own, but if a major accident does happen, the liability which befalls the person at fault can be very expensive, especially if the accident involves more than just two vehicles. In situations like this, the accident liability can even break the bank.

Insurance Coverage of More Than Just Your Car

While purchasing insurance is mandatory, service providers are now going further to assist you. The loss of personal effects (if your car is broken into) is covered, and some companies even offer immediate roadside assistance.

But Which Motor Insurance Type is best for me? Comprehensive Motor Insurance

As the name states, Comprehensive Motor Insurance covers both the liabilities of your car, and any opposite parties. In most cases, if your vehicle is still financed by the bank, it would be required that you purchase Comprehensive Insurance, as your vehicle is collateral to the bank.

You would want to purchase Comprehensive Motor Insurance when:

  • Your car is not fully paid up.
  • You want to protect your cash flow. With Comprehensive coverage, you only need to pay the excess, which is stated in the insurance contract, and the insurer covers the rest of the cost, thus saving you a huge sum.
  • You are highly mobile in your course of work, and will rely on your vehicle for the job. With Comprehensive Insurance coverage, you might even be provided with a replacement vehicle for the time that your personal vehicle is at the workshop.

Motor insurance policies like AXA SmartDrive is a Comprehensive plan which offers personal accident coverage for up to $500,000 and courtesy car when your vehicle is at the workshop (depending on the plan chosen). It also offers free 24/7 towing services within and out of Singapore.

Third Party Fire and Theft Motor Insurance

A Third Party Fire and Theft policy is more affordable than a Comprehensive one, but this offers much less coverage than the latter. While the policy does cover damages inflicted to other parties, it will not cover the damage to your own vehicle. Only damage to your insured vehicle due to fire and theft are still covered with this policy.

You can purchase a Third Party Fire and Theft policy when:

  • You are driving a car which is much older and lower in value.
  • You have enough funds to fix any damage on your vehicle.
  • The car will not be worth the repair in an event of a serious accident.

Third Party Motor Insurance

The most basic of policies, and the most affordable. You can purchase this if all the criterion is the same as Third Party Fire and Theft, but you will not be covered for fire damage, or if your vehicle is stolen.

What is the importance of a No Claim Discount (NCD)

If you are a young and new car owner, you will find that your Motor Insurance policy might be quite costly, but fret not, with accident-free driving, you will accumulate your No Claim Discount (NCD). Take it as a pat on the back for being a safe driver.

So how does NCD work?

With each accident free year, your insurer will increase your NCD by 10%, up to a maximum of 50%

Number of Years

No Claim Discount (NCD)

1 year without claims


2 year without claims


3 year without claims


4 year without claims


5 year without claims



But what happens to my NCD when I make a claim? And what is an NCD protector?

If you are a driver with 50% NCD, it does not mean that the entire 50% you have worked so hard for to keep goes down the drain. Here is how it works out.

No Claim Discount (NCD)

After a Claim





Less than 40%



An NCD protector is an optional add-on to your Motor Insurance policy, which essentially takes the “first hit” of the insurance claim, therefore you will not lose your No Claim Discount percentage. This comes highly recommended, especially if you have chalked up a higher NCD.

If I Switch Insurers, Do I Get To Keep My NCD?

The short answer is YES! But if you do have an NCD Protector which you have already used for a claim, another insurance provider might not recognise this, and refer to the standard NCD reductions instead. This is because the NCD Protector is not transferable between Insurers.

Carousell App exclusive! Get your Motor Insurance Quotation from AXA Insurance, and you can even conveniently insure your car in just 5 minutes!*

This feature is solely accessible through the Carousell App*

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