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Will being involved in a car accident increase your premiums?

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As a car owner, you require a car insurance policy to drive your car on Singapore roads. At the same time, an insurance policy provides much-needed protection, helping to defray costs in the event of an accident.

A car accident can cost you a pretty penny. Besides having to pay for third party damages, there may also be repairs to be carried out to your car after an accident.

Most drivers are aware that they should make a claim when they get involved in an accident. Yet, funnily enough, some drivers may be hesitant about submitting a claim for their car insurance.

This is because they fear a hefty increase in their insurance premium following a claim. They also fear losing their no-claim discount.

Increase in premiums

There is some validity to these concerns.

Making a claim is likely to affect your car insurance premium. There is usually a premium increase at renewal if you are found to be at fault for the accident, whether you knock into someone else or damage your own car by knocking into a lamppost or fire hydrant.

Still, not all claims lead to higher premiums. A no-fault claim will not affect your premium as much as an at-fault claim.

No-fault claim

A no-fault claim usually occurs when another driver is involved and has complete liability for an accident. An example is when they hit your car from behind while it was stationary at the traffic lights or while pulling out at a junction. In these instances, the other driver would be considered wholly at fault.

In a no-fault claim, your insurer will attempt to recover all costs of repairs to your vehicle from the other driver’s insurance company. If he is unable to do so, for example in the case of vandalism or in a hit-and- run accident, these may be considered as fault claims even though you were not to blame for the accident.

No-claim discount

If there has been no claim on your policy for a year or more, you are entitled to a no-claim discount (NCD). The NCD reduces your premium for the following year.

The NCD is your insurer’s way of rewarding you for having been a careful driver and motivating you to stay safe on the roads in order to enjoy cheaper premiums.

Making a claim does not automatically disqualify you from no-claim discounts. You may still be entitled to it if you are not liable for the accident.

Generally, your NCD will not be affected if your liability is 20% or less in an accident involving an identified vehicle.

In cases where the accident is partly or entirely your fault, your NCD is likely to be reduced if you don’t have an NCD protector cover.

If you settle the claim privately, your NCD will not be affected. This is the reason some drivers prefer to settle the matter privately, particularly if the repair cost is lower than the rebates or discount on your premium.

Too many accidents

Some drivers worry that having too many accidents will give car insurers the impression that they are high-risk drivers. This may be true to some extent. The severity of the accident may also hike up your premiums as the insurance company has to make a higher payout.

Making a full disclosure

A pristine driving record is your best bet for ensuring low hikes in premiums. However, if you have been involved in car accidents in the past, you are expected to make a full disclosure of them when you are applying for a car insurance policy.

This includes accidents involving all vehicles, not only cars. Hence, even if you had an accident while riding on a motorbike, you need to inform your insurer about it.

It also includes accidents while driving a company car. You ought to disclose these incidents even if you did not make an insurance claim during the time of the accident, or were not to blame in any way.

It is best to come clean about all your accidents to your car insurer as insurance providers do carry out verifications between the databases of various vehicles. This indicates there is a high probability that they will be able to spot any non-disclosure. Should they do so, you run the risk of having your policy rendered invalid.

Given this possibility, it makes sense not to withhold information from your car insurer and be upfront about such matters.

Budget Direct Insurance
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