Excess, NCD & More: 5 Vehicle Insurance Terms Explained
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If you’ve bought insurance coverage for your vehicle before, you’re probably already familiar with these words. But anyone new to the world of vehicle ownership may feel intimidated by all that lingo. In this article, we lay out 5 important vehicle insurance terms that you need to know. Hold on to your ballpoint pens, and don’t sign any documents before you read this:
1. Excess
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An excess or deductible is the amount of money you will need to pay before your insurer steps in to cover the rest for you. For instance, if your damaged car repair cost is S$2,000 and your excess is S$500, you’ll have to pay S$500 first. Your insurer will then pay the remaining amount which is S$1,500.
There are mainly three types of car insurance excess in Singapore: Standard Excess, Windscreen Excess, and Young or Inexperienced Driver Excess. “Young or inexperienced? Eh?” Trust us, we were curious the first time too.
2. NCD
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NCD (or No-Claim Discount or No-Claim Bonus) refers to a type of discount that’s applied to your premium if you remain accident-free, or get into an accident but your liability falls below 20%. For private car owners, the NCD increases by 10% for each every year that there’s no claim, until it reaches 50% in the fifth consecutive year, where it caps. This 10% means that you get 10% off your premium.
Year(s) without claims
NCD at renewal
1
10%
2
20%
3
30%
4
40%
5
50%
Motorcycle and commercial car insurance NCDs work a bit differently. The NCD increases by 5% each year and caps at 20%.
Year(s) without claims
NCD at renewal
1
10%
2
15%
3
20%
Pretty cool if you ask us.
3. TPO
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What, another acronym? TPO stands for Third-Party Only, which is a type of car insurance plan that only provides coverage for third-party property damage. If you’re going for comprehensive insurance, you won’t be seeing this term. It makes more financial sense for someone to buy TPO insurance if they’re driving or riding an older vehicle that’s about to be scrapped soon and if they don’t mind losing the vehicle to a possible accident.
4. Total Loss
We hope that you never get into this situation. But it’s still important to know what total loss is. “Total loss” is declared when a car gets so badly damaged in an accident that its repair cost exceeds its actual cash value. If you find yourself in such an unfortunate situation, don’t worry – BRZE is here to help.
5. Underwriting
This is the process in which the insurer evaluates the risk in insuring your vehicle. Various factors are considered at this stage, such as the driver’s age, driving history, and more. Underwriting is conducted by an underwriter who will go through your information and duly set your premium.
We hope these five simple terms give you a better idea! Buying the right insurance plan is so important, and if you’re still unsure of where to start, our consultants are here to help.