Blog / Car Insurance
What is a Certificate of Entitlement (COE)?
By Lynn Tan
Owning a car in Singapore can be a complicated business. Before you can take to the roads you’ll first need a Certificate of Entitlement or COE. But what exactly is a COE? Here is an easy guide to help make sense of the basics.
Vehicle Quota System (VQS)
Let us start by understanding the Vehicle Quota System (VQS).
With rising affluence, increasing ownership taxes alone was not effective in curbing vehicle population growth in Singapore.
To address this, the Land Transport Authority (LTA) implemented VQS in May 1990 to regulate the rate of growth of vehicles on the roads by limiting the number of new vehicles that are allowed to be registered.
VQS, together with Electronic Road Pricing (ERP), are key pillars in Singapore’s traffic management strategies.
How is vehicle quota determined?
The vehicle quota is computed and updated every three months and it takes into consideration the following criteria:
- Actual number of vehicles de-registered
- Allowing growth in vehicle population
- Adjustments to account for changes in taxi population, replacements under Early Turnover Scheme, past over-projections and expired or cancelled temporary COEs etc.
Under VQS, vehicles are classified into five categories, as follows:
- Category A- Car with engine capacity up to 1,600cc & maximum power output up to 97 kW (130bhp)
- Category B- Car with engine capacity above 1,600cc or maximum power output above 97kW (130bhp)
- Category C- Goods vehicle and bus
- Category D- Motorcycle
- Category E- Open (all vehicles, except motorcycle)
Certificate of Entitlement (COE)
Before anyone can own and use a vehicle in Singapore, they need to first bid for a Certificate of Entitlement (COE) under one of the five appropriate vehicle categories. The number of COEs released for the bidding exercise that takes place twice a month is determined based on the vehicle quota.
Only after a COE has been successfully secured can they register a vehicle and use it for 10 years.
At the end of the 10-year COE period, owners can choose to renew their COE by paying the Prevailing Quota Premium (PQP), which is the moving average of the COE quota premium for the respective vehicle category in the preceding three months, or de-register their vehicle.
Should they opt to de-register their vehicle before the COE expires, they are entitled to a COE rebate, which is pro-rated based on the number of months and days remaining on the vehicle’s COE.
Meanwhile, affordable motor insurance can help to moderate the already high cost of car ownership in Singapore.
Budget Direct Insurance
Pay less for your car insurance. Get a quote today and see how much you can save.