With the purchase of Motor Insurance being mandatory, not only do you have to pick one that best suits you, you also have to delve through all the different terms and try to make sense of them.
Here is a list of common terms used in Motor Insurance to assist you to make informed decisions.
1. Certificate of Entitlement (COE)
As most car owners are aware, a Certificate of Entitlement (COE) represents a right to vehicle ownership and use of the limited road space in Singapore for 10 years. To do so, you are required to obtain a COE in the appropriate vehicle category, before registering a new vehicle in Singapore.
COEs are released through the Open Bidding System, with a press release before each bidding exercise to indicate:
o The quota available for bidding in each vehicle category
o The start date and time
o The end date and time
There are 2 Open Bidding Exercises taking place every month:-
o Starts on the 1st and 3rd Monday of the month at 12pm
o Ends 2 days later on Wednesday at 4pm
If a public holiday falls within the 3 day bidding exercise, the bidding period will then be extended accordingly.
2. Prevailing Quota Premium (PQP)
The Prevailing Quota Premium (PQP) refers to the amount required to extend or renew the Certificate of Entitlement (COE) for a vehicle that is already in use.
When buying a used vehicle, you would not be required to bid for COE. Instead, all you need to do is pay the PQP and the COE will be renewed accordingly. The general cost of the PQP is usually the moving average of the COE prices in the last 3 months, which varies from month to month.
There are 2 general options for renewal of COE:
o To renew the COE for 10 years: pay the PQP
o To renew the COE for 5 years: pay 50% of the PQP
3. Open Market Value (OMV)
The Open Market Value (OMV), normally assessed by the Singapore customs, is the best price the sale of a vehicle would fetch at that current point of time in the open market, in cash terms.
It is based on the price of the vehicle when sold for export to Singapore, which includes the not only the purchase price, but also the freight insurance and all other charges related to the sale and delivery of the car to Singapore.
4. Additional Registration Fee (ARF)
The Additional Registration Fee (ARF) is a form of tax that you are required to pay once you have registered your vehicle.
ARF is quantified based on a percentage of the Open Market Value (OMV) of your vehicle, and will differ for different vehicle group types. The ARF rate for the registration of a car is shown in the table below.
| Vehicle Open Market Value (OMV) |
Additional Registration Fee (ARF) Rate (% of OMV to pay) |
| First $20,000 | 100% |
| Next $30,000 (i.e. $20,001 to $50,000) | 140% |
| Above $50,000 | 180% |
5. Preferential Additional Registration Fee (PARF)
Should your vehicle by under 10 years old before you de-register it for scrap or export, you will be granted the Preferential Additional Registration Fee (PARF).
The PARF rebate can be calculated based on the age of your vehicle (computed from the date of its registration in Singapore or its original registration in a foreign country, whichever is earlier) at de-registration. With that being said, used vehicles that have been imported and registered in Singapore before 1 September 2007 are ineligible for the PARF rebate.
The following table shows the breakdown of the PARF benefit for PARF-eligible cars:
| Age at De-registration (year) | PARF Rebate (A) (For vehicles registered with COEs obtained before the May 2002 tender) |
PARF Rebate (B) (For vehicles registered with COEs obtained from the May 2002 tender onwards) |
| Not exceeding 5 | 130% of OMV | 75% of ARF paid |
| Above 5 but not exceeding 6 | 120% of OMV | 70% of ARF paid |
| Above 6 but not exceeding 7 | 110% of OMV | 65% of ARF paid |
| Above 7 but not exceeding 8 | 100% of OMV | 60% of ARF paid |
| Above 8 but not exceeding 9 | 90% of OMV | 55% of ARF paid |
| Above 9 but not exceeding 10 | 80% of OMV | 50% of ARF paid |
| Above 10 | NIL | NIL |
There is also a simpler alternative method to calculate your PARF rebate. Simply go to the OneMotoring website (https://www.onemotoring.com.sg/content/onemotoring/en.html).
Additionally, there are 3 different methods in which you can redeem your PARF rebates:
- 1. Take them out in cash form (also known as encash)
o To be done within 12 months from the de-registration of your vehicle
o Can be done:
▪ Online
▪ By post or LTA’s Deposit Box
▪ Via an Electronic Service Agent (ESA) - 2. Use them to offset these various tax
o The Registration Fee (RF)
o Additional Registration Fee (ARF)
o The Quota Premium (QR)
o Used Car Surcharge and CEVS Surcharge
o Prevailing Quota Premium (PQP)Note: Should there be an unused balance after offsetting taxes and fees, it would be forfeited.
- 3. Transfer them to another party
o It must be divided should you wish to transfer it to more than 1 party, with a chargeable fee of $15 for every transfer per rebate
o Can be done:
▪ At LTA’s counter
▪ Via an Electronic Service Agent (ESA)
6. Safe Driver Discount (SDD)
The Safe Driver Discount (SDD) is an additional privilege of 5% discount off your Motor Insurance, and is granted to Safe Drivers who meet the following requirements:
o You have not committed any traffic offences or obtained any demerit points for the previous 3 years
o You have at least 30% No Claim Discount (NCD)
7. No Claim Discount (NCD)
The No Claim Discount (NCD) is a discount earned by the policyholder in the event that there has not been a claim made within a policy year. For each year without a claim, the policyholder would be granted an additional 10% NCD, which is capped at a maximum of 50% NCD.
In the case of an at-fault accident claim within the policy year, the insurer will penalise the policyholder’s NCD by 30% for each accident upon renewal. However, the policy would be exempt from such a scenario should the policyholder have a NCD Protector (NCDP) in their policy.
8. No Claim Discount Protector (NCDP)
A No Claim Discount Protector (NCDP) can be purchased by a policyholder once their No Claim Discount (NCD) has reached 50%, with its sole purpose being to protect the policyholder’s NCD from any deduction if there is an at fault accident claim within a policy year.
In the case of the policyholder having a NPCD, the policy would still be kept at 50% NCD, and will not be subject to a 30% deduction. Of course, there are conditions attached with the use of the NCDP, namely that it is only applicable for ONE at fault claim in a year. Should there be more than one at fault claim, the normal NCD penalty would then apply.
One thing policyholders should take note of is that although NCD can be transferred should you switch Insurers, NCDP is non-transferrable between Insurers.
9. Pro-rate Refund
Sometimes, under certain circumstances, the insurer would cancel your Motor policy before the entire policy period is up. In such cases, you will be entitled to a Pro-rate Refund of the premium you have paid, which is basically a full refund of unearned premiums calculated proportionally to the period of time you have left on your policy.
10. Short-rate Refund
Similar to Pro-rate Refund, Short-rate Refund is a different form of refund on your Motor policy, but this time, it is applied when you, the insured, choose to cancel the policy before its period is up.
In the case of a Short-rate Refund, you would not get a full refund of your unearned premiums. Instead, a penalty would be applied to the premium amount. This penalty is generally implemented to dissuade policyholders from cancelling their Motor policy based on their whims and fancies, and its percentage is subject to the Insurer.
However, as Motor Insurance is mandatory, should you be switching policies while still using your vehicle, you should ensure that the new one is effective as soon as your old one is cancelled.