If you have a minor car accident without bodily injuries and only minor damage, it may not always be smart to claim damages from your insurance company and lose your no claim, but instead, go for a private settlement. Here is what you can do;
- Agree with the other driver(s) on the spot that the damages are minor
- Get all parties to sign on a private settlement form
If you don’t already have a private settlement form in your car, download one from our site https://insurancemarket.sg and print out at least 2 copies.
In order to have peace of mind for you and the other party, you may want to drive to the nearest dealer or workshop and determine the damage.
Is such a settlement a smart move? Yes. Many people are ill-informed about what’s going to happen to their renewal premium after a claim. It can affect your premium for quite a few years to come. Two things happen when you make a motor insurance claim:
- your NCD drops, and
- your renewal premium increases because the insurer will impose a loading.
The net effect is that you have to pay more in premiums for the next 3 years. What you claim from the insurance company may be much less than what you have to pay extra in the near future.
Suppose you suffer damage of $1,500 and your excess is $600. In this case, what you can claim from the insurer is $900. Because of this claim, your NCD drops by 30%. This will add an average of $300+ to your annual premium. (The actual value depends on several factors.) Also, there’ll be a loading imposed. This may amount to another $100+ more. In the next 3 years, you’ll easily pay more than your original damage ($900).
How to Use the Private Settlement Letter
The private settlement letter must state the following details:
a. Location of the minor car accident
b. Date and Time of incident
c. Terms of Agreement
d. Particulars of all drivers involved
e. Signature of a witness
Fill up each field of the form with as much detail as you can. On top of this (if you can), take photos of any damages to your car and the other party’s car.
After signing the private settlement letter, both of you are bound to the agreements. As such, you and the other party will not be able to make claims against each other. This means you will not experience any complications or increased costs when you renew your car insurance.
You do not need to make a police report of a minor car accident if there is no bodily injury. However be aware that under the Singapore Motor Claims Framework (MCF), you MUST report the incident to your insurer within 24 hours and send them a copy of your private settlement form.