StudyingRES5

Switch exam

Financial advisory

Capital markets products

CM-SIPSpecified Investment Products: Derivatives & Collective Investment Schemes M8Collective Investment Schemes M8ACollective Investment Schemes II CM-EIPExcluded Investment Products: Securities, Collective Investment Schemes & Foreign Exchange

Insurance

M9Life Insurance & Investment-Linked Policies M9AStructured Products & Structured ILPs HIHealth Insurance PGIPersonal General Insurance CGICommercial General Insurance BCPBasic Insurance Concepts & Principles

Securities & derivatives dealers (IBF)

RES 1ASecurities Exchange Dealers RES 1BSecurities Dealers of Non-Exchange Members RES 2BDerivatives Dealers of Non-Exchange Members RES 2ADerivatives Exchange Dealers RES 12BSecurities & Derivatives Dealers of Non-Exchange Members

← All study notes

PGI — Personal General Insurance

Motor Insurance

Motor insurance protects a vehicle owner against the costs of accidents, theft, fire and — as a legal requirement — injury or death caused to third parties, with the scope of protection set by the level of cover chosen and priced through mechanisms such as the No-Claim Discount and the policy excess.

8 sections~5 min read

Must-know for the exam

Only compulsory motor cover is third-party liability for DEATH or BODILY INJURY to others; using a vehicle on a public road without it is a criminal offence, and it protects innocent victims.
Third-Party Only (TPO) is the legal minimum: it covers third-party injury and third-party property damage but nothing for the insured's own vehicle.
Third-Party, Fire and Theft (TPFT) adds cover for the insured's own vehicle against FIRE and THEFT only — not accidental collision damage to that vehicle.
Comprehensive is the widest tier: TPFT cover PLUS accidental damage to the insured's own vehicle, subject to exclusions and the excess.
Third-party bodily-injury liability is typically uncapped, while third-party property damage is usually subject to a stated policy limit.
The No-Claim Discount (NCD) rises with each consecutive claim-free year up to a maximum; it attaches to the policyholder's record and can move between cars and insurers.
Making an at-fault claim usually reduces or resets the NCD at renewal, so a small claim can cost more in lost discount than the repair — unless an NCD protector was bought or full recovery is made from an at-fault third party.
The EXCESS (deductible) is the first part of each claim borne by the insured; it removes small claims and curbs moral hazard, and can be standard, additional/compulsory (e.g. young or unnamed drivers) or voluntary.
A higher excess lowers the premium and a lower excess raises it; after an at-fault claim the insured may pay the excess AND lose NCD.
Named-driver policies restrict cover to listed drivers and are usually cheaper; an ineligible or unnamed driver can void own-damage cover, though compulsory third-party liability generally still responds.
Singapore's Motor Claims Framework standardises accident reporting and handling to curb fraud and disputes, channelling accidents to approved reporting centres/workshops.
An accident should be REPORTED to the insurer PROMPTLY (within a defined short period) regardless of fault or intention to claim; late or non-reporting can prejudice the claim or forfeit the NCD.
A TOTAL LOSS (write-off) occurs when repair is uneconomic or the vehicle is unrecovered after theft; the insurer pays market value (subject to sum insured), takes the salvage, and the policy typically ends.
BETTERMENT applies on repairable claims: because insurance is indemnity, if new parts leave the car better than before, the insured contributes the improvement — separate from and additional to the excess.

What motor insurance covers and why it is compulsory

Motor insurance indemnifies a vehicle owner against the financial consequences of using a vehicle: damage to the insured's own car, damage or injury caused to other people (third parties), and losses such as theft or fire. It is a core personal general-insurance product because almost every vehicle on the road must, by law, carry a minimum level of cover.

The legal driver of the market is COMPULSORY THIRD-PARTY cover for BODILY INJURY. Motorists must be insured against liability for death or bodily injury caused to third parties (other road users, passengers and pedestrians) before a vehicle may lawfully be used on a public road. Driving without this minimum insurance is a criminal offence.

The rationale is protection of the innocent victim: if a driver injures someone, the victim should be able to recover compensation even if the driver personally cannot pay. Compulsory third-party insurance shifts that liability onto an insurer with the means to meet the claim.

Everything above this legal minimum — cover for the driver's OWN vehicle and for third-party PROPERTY damage — is optional, and it is the level of cover the policyholder chooses that determines how much of that additional protection applies.

The three levels of cover

Motor policies are offered in three ascending tiers, each broader than the last. The tier chosen is the single biggest determinant of what a claim will and will not pay.

•THIRD-PARTY ONLY (TPO) — the narrowest cover and the legal minimum. It pays for death or bodily injury to third parties and for damage to third-party PROPERTY (such as another person's car or a wall), but it pays NOTHING for damage to the insured's own vehicle, nor for its theft or fire.
•THIRD-PARTY, FIRE AND THEFT (TPFT) — third-party cover PLUS loss of or damage to the insured's own vehicle caused specifically by FIRE or THEFT. It still does NOT cover accidental collision damage to the insured's own car.
•COMPREHENSIVE — the widest cover. It includes everything in TPFT and ADDS accidental damage to the insured's own vehicle (for example, from a collision), whether or not another party is involved and often regardless of fault, subject to the policy terms and excess.

Premium

Every note. Every question. One pass.

6 more sections of this note are part of Premium.

Every section of every study note
13,000+ questions across every CMFAS module
Full timed mock exams
A worked explanation on every question
Your full mistake bank and weak-area review

Unlock with Premium

From ≈$14.83/mo on the 6-month pass

Traps that cost marks

Assuming all third-party or own-vehicle covers are equally compulsory rather than just bodily-injury liability.
Believing TPO gives any protection for the insured's own car.
Confusing TPFT with comprehensive by assuming it also covers own accidental damage.
Thinking fire-and-theft cover already includes accidental own-damage.
Assuming both third-party covers share the same monetary cap.
Believing the NCD is tied to a specific vehicle rather than the driver's record.
Overlooking that lost NCD, not just the excess, drives the cost of small claims.
Confusing the excess (what the insured pays) with the policy limit (what the insurer pays).

Ready to test yourself?

Drill exam questions on Motor Insurance and lock it in, or sit the free CMFAS mock exam with no sign-up.

Practise this topic →

Exam-style questions

A finance company holds a hire-purchase interest in an insured car that is written off. How is the total-loss payment typically handled?Answer explained →Which two principles are described as anchoring the motor insurance product?Answer explained →A motor policy excludes liability arising while the driver is under the influence of alcohol or drugs above the legal limit. If an intoxicated insured causes an accident injuring a third party, what is the likely position on the compulsory third-party injury cover?Answer explained →How should a learner treat the exact reporting time limits and approved-centre lists under the Motor Claims Framework?Answer explained →

Next →Property & Household Insurance