Tan Kin Lian's Blog: Motor insurance on new cars

Thursday, May 10, 2007

Motor insurance on new cars

When you buy a new car, the distributor usually adds the first year's insurance as part of the package.

They are able to squeeze the insurance company to provide low premium, high commission (to the distributor) and to repair the car (in the case of an accident) with the distributor's workshop at high charges.

Guess what? The insurance company makes a big loss during the first year. They hope to recover their loss by charging higher premium rates from the owners in subsequent years.

If you renew your insurance with the same insurer, you are likely to pay more than the competitive rates outside.

You can save a lot of money by shopping around. You can call NTUC Income at 98 462663 (ie 98 INCOME).

5 comments:

Thomas Phua's Blog said...: Most new car owners are threaten by the warranty of new car if insurance is not taken with their tied insurer.

How far can distributor void warranty?

If my rear bumper is hit and repaired by other workshop is the distributor going to void my warranty of engine of door power window?

I think the distributor should be fair to car owner to threaten warranty like this.

I always tell my clients, most workshop can do good repair, otherwise many motor repair workshops in industrial park would have closed shop long ago.

Motor Plan that has repair at insurer's authorised workshop is lower in premium by 20 to 30%.

Also distributor workshop will not handle third party claim when one try to engage them to claim against third party. Owner is asked to claim own policy or pay for repair and then claim against third party insurer.

IDAC is a hassle free scheme, and central location for repair claims which insurer like NTUC INCOME uses.

Do not be fooled by others who say IDAC is troublesome, to me it serves as one stop claims service point.

- Thomas Phua; May 10, 2007 9:23 PM
Edwin said...: I recently got into an accident. Someone rear ended my vehicle. It was not too serious, it dislodged and dented the plastic bumper.

I went to the distributor workshop and was quoted 900 for replacement, and respray.

In the end, insisted not going to the distributor and went to a 3rd party's workshop. The repair was done at a much lower rate.

However, the paint job that was done did not seem to match properly to the tone of the car's body.

The workshop adviced me that since my car is already 2 years old, the there is definitely going to be a difference in tones between the old and new paint.

I guess I have to live with it. I for sure know that if I had gone back to the distributor's workshop, they were sure able to match the paint work. This was because, my brother also got into a car wreck not too long ago, and they managed to match the paint work.; May 12, 2007 10:12 AM
Edwin said...: To solve the problem with overcharging, we could take a chapter from the US. Their insurance policy and car workshop have a computer system that links together when filing a claim.

Here is what I have observed.
1. They have a searchable database of vehicle types, model numbers, part types with price of individual components.

2. They have a recommended rate, say, man hours to fix a part or to do spray painting. (ie: $60/hr)

3. Every item is itemized.

4. They will then submit this to the claims of the insurance div and within a day, they will get a reply with or without adjustments. If the claims is lower, then what the insurance company is ready to pay, they can get the approval to do the repairs more quicker.

If the claims is really high, most of the times for serious accidents, they will have the evaluator to drop by the workshop and access the condition of the wrecked car.

I think we should have a fixed rate say to do repairs. I do not know if the cost of repairs in a wreck will come from materials and parts or is from man hours.

The benefit of this is that all repairs, whether you doing it at Workshop A or Workshop B, it is going to cost about the same throughout. Of course, the labor or workmanship rate has to be reasonable in order for car workshops to remain in business.

Frankly, I do not like the idea of sending out a job via bidding and the lowest bidder gets the job. You pay peanuts, you get monkeys repairing your car.

Instead, insurance company should set a realistic minimal sum to get a certain repairs done, instead of paying as little as possible.; May 12, 2007 10:28 AM
Edwin said...: This comment has been removed by the author.; May 12, 2007 10:45 AM
Edwin said...: would like to suggest that insurance companies should have the following policy.

To lower the cost and risk, we should have a policy that is only for the named/ said driver only.

Family members staying in the same house hold driving the car should not be covered if they are not named drivers in the policy. They have to be rated in the policy if they drive the car for more than a total of 15 days in a year.

There is a clause in the policy, when I was in the US, that even family members or house mates should not drive the car more than 15 days in a year. If you are sharing a car with your room mate, he will have to be listed in the policy and RATED as well.

The benefits of this is that insurance company will be able to better manage risks of drivers - drivers that has got a new drivers license, drivers that get caught speeding.

For an example, if a child just got his/her license, and it is rated in the policy, there is a plan that say that within the first year, this person must be accompanied by a driver (his father or mother) when driving on the roads. Hence, after you get your drivers license, you will still have to practice responsible driving.

The other benefit is that this will promote responsible driving while you are on the road.

If the child decides to get a car (provided it is not a brand new car from the distributor), I am sure, most of the time, they will go back to the car insurance company.

They are also entitled to discounts, as they have maintained a clean driving record or has not got into any situation where a claim has to be made.

Overall, it is a win win situation. The insurance company is able to access whether this is a high risk road user and provide lower premiums thus providing savings to the consumers.; May 12, 2007 10:48 AM