Car Insurance Premiums

Your car insurance premium isn't set at random — it's shaped by several important factors that insurers use to measure your risk. Knowing how each one works helps you take control of your costs and choose the cover that fits both your needs and your budget.

Types of Coverage

In Singapore, motor insurance policies generally fall into three categories. The type of coverage you choose determines what is protected and how claims are handled.

• Third-Party Only (TPO)
  • The most basic and affordable car insurance option. It meets Singapore’s legal requirements by covering third-party bodily injury and property damage, but it does not cover accidental damage to your own vehicle
• Third-Party, Fire, and Theft (TPFT)
  • This policy includes everything covered under TPO, with added protection for:
    • Accidental loss or damage by fire to your vehicle
    • Loss or damage due to theft
    • It offers a mid-level balance of affordability and protection, though it still does not include cover for accidental damage to your own vehicle.
• Comprehensive Insurance
  • Comprehensive policies come with a higher premium, but offer wider coverage. They cover accidental losses or damage to your own vehicle, third-party liabilities, fire, and theft.

Driver's Profile and Experience

Who you are behind the wheel matters just as much as what you drive. Insurers assess your personal risk profile closely, and certain traits can push premiums up or down. Here's what they look at:

• Driver Age, Gender, and Experience

Your age, gender, and driving experience are closely linked, and together they help insurers assess how much risk you pose on the road. For young and inexperienced drivers, most insurers consider drivers under the age of 25 to 28, or those with less than two years of driving experience, to face higher premiums. This is because insurers associate limited road experience with a higher likelihood of making claims. While Singapore’s official accident statistics do not provide detailed breakdowns by age group, global trends and actuarial modelling continue to support this risk-based pricing.

Gender may also influence pricing. Male drivers, particularly in younger age brackets, are statistically associated with higher accident rates. Although risk varies by individual, insurance pricing reflects these broader behavioral trends.

If you are a newly licensed driver, regardless of your age, your premium may still be elevated until you build a clean, claims-free driving record. Over time, insurers may reduce your premiums, and you may qualify for No-Claims Discounts (NCDs) that reward responsible driving.

• Occupation

What you do for a living can also affect your insurance costs. Jobs that involve frequent driving, such as sales, courier, or delivery roles, may lead to higher premiums due to increased road exposure and accident likelihood.

Vehicle Profile

The vehicle you drive plays a major role in how your insurance premium is calculated. Insurers consider a range of factors linked to your car’s value, performance, and risk profile.

• Make, Model, and Age

Premium pricing is influenced by the expected repair or replacement costs. Insurers estimate these costs based on parts availability, labour charges, and whether specialist work is needed. A car’s current market value is one of the core factors in determining your premium. Higher-value cars typically cost more to replace or repair, which may result in higher premiums

Luxury and performance models, including turbocharged cars, supercharged cars, coupes, cabriolets, and supercars, generally attract higher insurance premiums, regardless of their age. Their parts are often more expensive, repairs require specialist skills, and they're typically associated with higher speeds and risks.

On the other hand, some older, mass-market vehicles may cost less to insure, especially if parts are readily available and repairs are straightforward. However, “older” doesn’t automatically mean cheaper. Insurers also factor in the vehicle’s market value, condition, and model-specific risks when setting premiums.

• Engine Capacity

Vehicles with larger engine capacities may attract higher premiums. This is because high-powered vehicles are often associated with greater speed potential and, in some cases, riskier driving behaviours such as speeding or aggressive acceleration. Insurers may factor in these risk characteristics, along with the higher cost of repairs, when calculating your premium

• Vehicle Modifications

Vehicle modifications refer to non-factory changes made to a car’s performance, structure, or appearance. Examples include engine tuning, exhaust system changes, suspension upgrades, or the addition of body kits.

Insurers consider all modifications to be material information that must be declared at the time of underwriting, even if the modifications have received approval from the Land Transport Authority (LTA). Any modifications may affect your policy terms — including the premium charged, the scope of coverage, and the excess payable. Insurers assess each modification individually based on how it changes the vehicle’s risk profile.

Failing to declare modifications can result in serious consequences, such as claim rejection or cancellation of your policy.

Inclusion of Named Drivers

When you take out a car insurance policy, you’re not always the only person who might get behind the wheel. Who else is allowed to drive your car — and how they’re listed — can make a difference to your premiums and claims.

• Main Driver

The main driver, sometimes called the primary driver, is the person who drives the insured vehicle most frequently. Insurers base most of their risk assessment and premium calculation on this person’s profile, including their age, driving history, and claims record.

• Named Driver

A named driver is an additional person officially listed on your policy who is allowed to drive the insured vehicle. Their details are declared at the time of purchase, and the insurer accepts them as part of the coverage agreement. Only named drivers are permitted under such policies, which are commonly applied to high-performance cars.

• Unnamed Driver​​​​​​

An unnamed driver is someone who uses the insured vehicle but isn’t officially listed in the policy. Depending on the policy terms, unnamed drivers might not be covered at all, or claims involving them could attract higher excesses or even face rejection.

• How It Affects Premiums

The risk profile of each named driver affects the overall cost of the policy. Adding a young or inexperienced driver, such as someone under 25 or with less than two years of driving experience, usually results in higher premiums. Insurers adjust the premium to reflect the increased risk associated with any additional drivers.

• Restrictions and Excess Rules

Some policies apply stricter terms for unnamed drivers. For example, insurers may impose a significantly higher excess if an accident involves a driver not officially listed on the policy. In some cases, claims may be reduced or declined depending on the policy’s specific conditions and whether the insurer permits unnamed driver usage.

Policy Excess

When choosing a car insurance policy, it’s not just the premium you need to consider; the excess matters too. It directly affects both what you pay upfront and what you might pay later if you make a claim.

• What Is Excess?

Excess is the fixed amount you must pay out of pocket before your insurer covers the rest of a claim. For example, if your excess is $500 and your repair bill comes to $2,000, you’ll need to pay the first $500 yourself, and the insurer will cover the remaining $1,500.

• Impact on Premiums

There’s a direct trade-off between your excess and your premium. Choosing a higher excess usually leads to a lower premium, but it also means higher out-of-pocket costs if you need to claim. If you want to keep monthly or annual costs down, opting for a higher excess can help, but you’ll need to be confident you can afford it if something happens.

Policies may also impose additional excesses based on driver profiles. Young drivers under 25 and those with less than two years of driving experience often face mandatory extra excess amounts. Insurers use these additional charges to offset the higher risk associated with less experienced drivers.

Claim History

A history of previous claims often signals a higher likelihood of future claims, leading insurers to increase your premium at renewal. In some cases, a particularly high number of claims or serious incidents could even result in the denial of coverage altogether. Keeping your claims to a minimum is one of the most effective ways to keep your insurance costs under control.

No-Claims Discount (NCD)

The No-Claims Discount (NCD) is a reward system designed to encourage safe driving and responsible insurance use. It's one of the most significant ways drivers can lower their premiums over time.

• NCD Structure

In Singapore, the NCD operates on a progressive scale. For each year you maintain a claim-free record, you earn a higher discount on your renewal premium — up to a maximum of 50%. The more years you drive without making a claim, the larger your discount.

• Impact of Claims on NCD

Making a claim can reduce your NCD significantly, depending on the insurer’s specific rules. Losing part or all of your NCD means higher premiums at renewal, even if the incident wasn’t entirely your fault. Protecting your NCD wherever possible can make a major difference to your long-term insurance cost. Most insurers do offer NCD Protector Coverage, with an additional premium

Period of Insurance with no claim	Discount on renewal
One year	10%
Two years	20%
Three years	30%
Four years	40%
Five years or longer	50%

Why Does the Choice of Workshops Matter?

When buying car insurance, many drivers overlook the workshop restrictions written into their policies. But where your car gets repaired after an accident can have a big impact on both your claim experience and your premium.

• Authorised vs Any Workshop

Your policy may have restrictions on where you can send your vehicle for repairs when making an accident claim against your own policy. For example, Liberty’s Private Car insurance policies require repairs to be carried out at either a manufacturer-appointed workshop or one of Liberty's authorised workshops. The exact requirement depends on the plan selected — the Comprehensive Standard Plan allows both options, while the Comprehensive Preferred Plan requires repairs to be done at Liberty’s authorised workshops. These approved workshops are selected to meet specific standards for repair quality and cost control.

Choosing a policy that allows repairs at any workshop gives you more flexibility, but it usually comes with a higher premium.

• Flexibility vs Lower Premiums

Policies that restrict you to a panel of authorised workshops often cost less. Insurers can control repair costs better through these arrangements, which let them offer lower premiums in return. On the other hand, if you want full freedom to choose your own workshop, expect to pay a little more.

When comparing policies, it’s important to weigh whether the savings from a restricted workshop plan are worth giving up the ability to select your own repairer.

Additional Coverage Options That Increase Costs

While basic car insurance covers the essentials, many policies offer extra add-ons to extend your protection. These additional coverage options can provide valuable benefits, but they also increase your premium.

• Windscreen Cover

Windscreen cover under a Comprehensive plan may pay for the repair or replacement of a cracked or broken windscreen due to an accident, subject to policy terms. Without this add-on, you may need to bear the full cost of windscreen damage. In most cases, a separate windscreen excess also applies when a claim is made.

• Personal Accident Cover

Personal accident cover provides financial support for medical expenses if the driver or passengers are injured during an accident. It offers extra protection beyond standard third-party liability, giving drivers added reassurance on the road.

• Roadside Assistance and Towing Services

Breakdowns can happen when you least expect them. Some insurance policies offer roadside assistance and towing services. Covering emergency support for issues like flat tyres, battery issues, or towing to a repairer or place of safety following an accident, making sure you’re not left stranded.

• Excess Waiver

An excess waiver is an optional add-on that removes or reduces the standard excess, the out-of-pocket amount you must pay when making a claim. While adding an excess waiver increases your overall premium, it helps reduce financial strain during a claim. Benefits of excess waiver include:

• Reduces or eliminates out-of-pocket repair costs during a claim
• Provides financial predictability, especially for newer or cautious drivers
• Provides peace of mind by limiting the risk of sudden, large expenses

Choosing which add-ons to include depends on your needs, risk tolerance, and budget. Always weigh the cost of these extras against the value they offer.

Conclusion

Many factors influence your car insurance premiums — from your driver profile and the type of coverage you choose to your claims history and even the workshops you're allowed to use. Understanding how these elements interact helps you make more informed and confident insurance decisions.

While lower premiums may seem appealing, they can sometimes come with a trade-off. A lower upfront cost might leave you with limited protection, specific exclusions, or higher out-of-pocket costs during a claim. It’s just as important to assess what the policy covers, the restrictions it includes, and whether it meets your actual needs.

If you're ready to find the right balance between cost and protection, reach out to your Liberty representative for a personalised quote today!

Disclaimer: The information provided in this article is for general information only and is not intended to provide a complete descriptions of all terms, exclusions, and conditions applicable to every insurance product or service offered by Liberty Insurance. Liberty Insurance makes no representations or warranties of any kind whatsoever that the information and materials contained on our website are suitable for your needs, are complete, timely, reliable, or are free from errors, inaccuracies or typographical mistakes. Please refer to our website terms and conditions (Terms and Conditions | Liberty Insurance Singapore) for the terms of use and refer to the policy wordings of the products for more details on the relevant terms and conditions