In the old days (before Sep 1989), insurance premiums were derived using a standard table provided by the General Insurance Association of Singapore (GIA). This table is known as a Motor Tariffs Table.
Under this system, factors such as the ones below were used as a basis for computation:

- Type of Cover,

- Engine Capacity,

- Carrying capacity of Vehicle,

- Car usage, and

- Value of vehicle

After that, the Motor Tariffs Table evolved into the Points Rating System. The major difference between these two systems is that the Points Rating System takes into consideration the characteristics of the driver – age, marital status, indoor/outdoor job, et cetera.

Then in Jul 2001, the GIA formed a Motor Insurance Task Force (MITF), which promulgated a Risk Factor Premium Rating System, improving upon the previous system.

Under this system, points are awarded to various risk factors, based on the industry or insurer’s own risk profile and claims experience.

This means that if there’re lots of people who’re making claims against a particular insurer compared to the other insurers, this insurer will tend to (or rather…have to) charge higher premiums so as to conform to the Risk Factor Premium Rating System. And of course this REALLY makes sense for this particular insurance company’s financial health as well.

Enough of the insurers. Now, let’s talk about you…

What does the above information mean to you?

It implies that even though you have submitted the exact same information to different insurers, the premiums that you’re charged for your auto insurance WILL be different. This is because the points that you’re awarded (internally) by the insurers will be different, due to the company’s own risk profile and claims experience.

Therefore the only logical action that you HAVE to take is to compare several different quotes from different established and reputable auto insurance companies. You’ll thus be able to tell which motor car insurance company gives you the best deal.

Of course it’s a great hassle to do so, but it’s well worth it. And you don’t have to do it yourself if you have a car insurance quote comparison service working for you.

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Looking for the cheapest car insurance quote can be quite a hassle – looking up different auto insurers, putting together different quotes with different benefits, doing research on which insurance companies are reputable and which one makes you jump through hoops when you need to claim, etc.

One way to skip through all these trouble is to engage a motor insurance comparison service. Such service applies to both personal and commercial vehicles.

After submitting all relevant and necessary information, you can access the cheapest insurance quotes with maximum benefits for your automobile. (Usually after 1-2 working days) Even if you’re riding a motorcycle, the comparison service can serve you to fetch the best deal for you as well.

Why Do Quotes From Insurance Companies Differ?

Auto insurers charge premiums according to a pretty standard criterion. And the reason why their quotes are different is because the benefits that they offer are different. Also, the insurer’s claim experience differ, therefore their risk tolerance are different.

In light of the above, the cheapest car insurance quote may be lacking in some benefits – benefits that are provided by all other insurers. Yes, there are those very cheap auto insurance quotes that covers exactly what the rest of the insurers are offering. However, sometimes, it takes forever to claim. That’s why motor insurance quote comparison services do not usually recommend the very cheapest quote. Instead, a cost-benefit comparison approach is usually taken.

By the way, you didn’t hear the “take forever to claim” part from me – go talk to the rest of the car owners and you’ll know which insurer has good (or not so good) claims reputation.

How Do The Insurers Price Your Car Insurance Policies?

Insurance companies price each policy according to the risk they’re undertaking to insure you. Risk is calculated by historical (and statistical) claims data. Insurers often regard females and older drivers as safe drivers, thus giving them more discounts and benefits. Statistically, young male drivers cause the most road accidents. Thus, drivers that fall into this category often pay a higher premium for the same benefits.

Auto insurance companies will reduce your monthly premium if you can show proof of a clean driving record. Providing information like No Claim discount (NCD) is important and will help you get the best deals. You can find out your NCD amount from your existing insurance company.

Another factor that determines the price of your insurance premium is the make and model of your car. For example, driving a sports car will cost you more on car insurance expenses compared to an average car. This is because cars that are faster and more powerful are considered more dangerous (riskier for the insurer).

All these basic factors are what auto insurance companies consider when giving you a quote. Thus, it is important to provide at least the above information when looking for car insurance quotes.

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Excess is included in a private motor insurance to deter motorists from making small claims. Excess is the initial amount of any claim that the auto insurer will not pay. In other words, the car owner has to bear this cost.

For example, if the cost of your claims amount to $2,000 and the deductible is $600, you’ll have to bear $600 while the rest can be claimed from the insurer. An illustration is drawn for you below:

If the total amount (for repairs, damages, etc) is less than the excess ($600), nothing is payable by the insurer.

But…why do the insurers want to impose such an idea on motor car insurance? Because…

- The insurers hopes that the drivers will take more care and responsibility as the driver still has to pay for damages not exceeding the excess amount.

- Claim payouts (by the insurers) are reduced by the excess amount, the risk/liability of the insurer is also reduced. This also lowers the insurance premiums.

- There are fixed costs incurred to service each claim, it doesn’t make sense (economically) for the insurers to attend to each and every small claim.

- For customers with bad claims experience (profiled as high risk for the insurers), higher excess can be imposed to allow their car insurance to remain in force. This also keeps their premiums within financial reach.

You can certainly request for excess to be removed or reduced in some cases. But since the insurers are taking on extra risk, your premiums will go up by quite an amount. For drivers under 21 (or 23) years old, such excess cannot be removed.