How to secure reduced-premium usage-based car insurance?
If you have ever wondered when motor insurance companies will come up with a fair system to reward safe driving based on facts, the answer is now. Usage-based car insurance plans in Singapore gather their harvest this year, as one year has passed since their introduction to the Singapore market. These tailor-made motor insurance plans take will now show their impact and real-world potential for lowering insurance premiums during the policy renewal process.
What is usage-based car insurance?
Usage-based car insurance takes into accounts a combination of how well you drive and how much you drive. The insurers in Singapore who sell usage-based car insurance offer pay-as-you-drive (PAYD) plans, pay-how-you-drive (PHYD) plans, or a combination of the two. These plans are based on telematics technology, which collects driving behavior data to calculate a driver’s premiums. Such plans were designed to encourage safe driving, and remove the traditional approach of rating drivers based on their age and experience, thereby allowing them to be in control of their savings and premium price directly.
Pay-as-you-drive plans calculate your insurance premium based on the mileage you drive, usually in the form of a discounted premium with a set mileage amount at the start of the policy. A policyholder then only pays higher premiums if he or she exceeds the set mileage amount on a quarterly basis. This form of insurance utilizes telematics app technology to measure the driver’s traveled distance. This is a good solution for those who don’t drive much, and who don’t want to overpay for their car insurance.
Pay-how-you-drive plans are a bit more sophisticated, but what remains the same is the technology used to make them possible. A telematics device is installed in a policyholder’s car to measure his or her driving behavior. A driver gets a driving score based on a driver’s behavior as it relates to speed, braking, turning and accelerating, as well as the distance traveled during the first year of the policy. A driver’s rating and the No Claim Discount are then considered by the insurer when computing their new insurance premium at plan renewal time.
The main difference between these two plans is the time when a driver can expect a discount: With a PAYD plan, the rebate is set from the beginning of the policy, but to enjoy any deductions from PHYD or combination plans, a driver must wait until his policy renewal date.
What kind of discounts can I get when enrolling in usage-based car insurance?
Since its introduction to the Singapore market in 2017, usage-based motor insurance is becoming increasingly popular among drivers, especially those who deem themselves to be safe drivers, and are striving after insurance premium savings. When it comes to insurance premium discounts, usage-based car insurance plans from different insurers offer a range of premium and excess charge savings. There’s something for everyone in here:
The term “young and/or inexperienced driver” refers to a driver aged below 27 years old and/or who has held a valid driving license for fewer than two years. Most plans add an excess of up to SGD3,000 to the policy for young/inexperienced drivers. There is one insurance plan in Singapore that can remove this excess entirely if the driving score of the young driver or primary policyholder is high enough.
For those who don’t drive too much, a pay-as-you-drive approach might the be the cheapest option. There are PAYD plans on the market that start with a generous (up to) 50% reduction in premiums, and depending on the mileage you drive, you either end up paying lower premiums or paying a little extra if you exceed the stated maximum mileage amount.
No claims discount
The great news for drivers is that no claims discount remains intact on usage-based car insurance plans. Telematics-based plans were set up by the insurers mostly to motivate drivers to drive safely because fewer claims being made means a better the bottom line for the insurer.
From 15% to a whopping 35% discount on premiums can be scored across Singapore insurers for good driving scores. What remains important is that these discounts can only be applied at policy renewal time, and are calculated based on the driver’s safety score, which is extracted from the telematics device attached to the car.
There is no catch when it comes to influencing the cost of motor insurance based on PHYD plans. Insurers won’t punish drivers with “bad” telematics scores. The worst that can happen is that such drivers won’t qualify for further discounts. Insurers encourage policyholders to use this type of insurance by creating safe-driving competitions and premium decrease schemes, as ultimately there is plenty of ways for insurers to benefit within the usage-based car insurance market.
You’re in control
The greatest thing about usage-based car insurance is the fact that you are in charge of your car insurance premiums and rebates. Usage-based car insurance is simply a fair system to reward safe drivers. Insurers can show their trust toward safe drivers in the way that speaks to them the loudest: the price.
How to secure usage-based car insurance in Singapore
The main thing to remember is that enrolling in a usage-based motor insurance plan in Singapore means that you can start enjoying premium and excess discounts during the plan’s first renewal. Choosing usage-based motor insurance is, in fact, a long term investment. That’s why we recommend using the service of a car insurance broker, such as Kwiksure Singapore.
Our experienced team will prepare for you a free plan comparison and provide you with a free price quote; while always taking into consideration your specific needs and budget. Contact us today to learn about all of your car insurance options!