3 Reasons Why An Independent Warranty is Better

Posted on Posted in Aftersales, Uncategorized

So you’ve found the new car of your dreams and are comparing packages that different companies are offering. The most important consideration should be the warranty that comes with your brand new car. Nobody wishes for this but it’s a fact that manufacturing faults do occur for any product. A good warranty program guarantees to rectify these faults in brand new cars and protects the buyer from paying for it.




“How does your warranty work?” is the number one question that our customers ask and we hope this 5 minute read will explain to you why all our cars come with an Independent Warranty. And why we think it’s a smarter choice compared to having an In-House Warranty in Singapore!


1. Reliability – Third Party Warranties in Singapore is a Regulated Business

For brand new cars, there are 3 main warranty providers in Singapore. These warranty programs are jointly offered by reputable workshops and insurance companies (Hitachi Capital-MSIG, OptimaWerkz-Liberty, MBMWheelpower-QBE Insurance). The workshops provide technical know-how and servicing while the insurance companies underwrite the financial risk of insuring these cars.

Warranty Providers Singapore

And just like regular insurance, the insurance companies will honor and pay for the claimed amount in the event of a fault (similar to a life insurance policy where they pay when an accident has occurred). You can safely expect your cars to be covered and your wallet to be protected in any scenario.

Without going into too much detail of how it works, the insurance companies pool the money from selling these warranties and assign dedicated asset management teams to invest and grow this money so as to achieve 2 results : 1) to be able to cover any claims that arises and 2) make money out of it for shareholders.


In-house warranties work a little differently. The dealer takes on 100% of this risk as his own and by doing so, his customers unknowingly gamble that the dealer will not go out of business. We assume that some dealers set aside a portion of the sale for claims, however it’s also safe to assume that some simply count this as profit and take the chance that these claims might not happen.

This risk if left unmanaged, could be potentially disastrous for both the dealer and his customers. A bad batch of cars could prove to be too expensive and  the dealer could be forced to cut corners to rectify this. Customers do not know that they are taking on this risk. In fact larger companies are more susceptible to this as bigger operations = larger business running costs, and more car sales = higher risk of claims!


2. Conflict of Interest

There is a clear conflict of interest in being the warranty provider and the seller of the car. In the event of a warranty claim, which of the 2 dealers below do you think is more likely to have your interests at heart?

Third Party Warranty Singapore

When you compare them side-by-side the better Dealer becomes clear. For Dealer A, he has paid for this assurance for all his clients – there is no doubt that he would want to get his money’s worth and will fight for any claim to be 100% paid out and the car is fixed to how it’s meant to be.

Whereas for Dealer B, how enthusiastic do you think he will be once the claims start to pile up? If his initial profit of selling the car to you was only $5,000, any claims larger than that would put him at a loss.


3. Warranty premiums are based on statistical data

Insurance companies dedicate tons of resources to calculate how much risk they take on and how much it could cost them. They hire people called actuaries to collect, interpret and model historical data sets to predict the failure rate of every individual model and calculate what it will cost them to cover this. (Did you know that we have to pay a different premium for every model of car?)

These actuaries have gone through rigorous quantitative and qualitative math degree programs and have to pass at least 7 exams after they have graduated in order to be qualified. It is unlikely that a car dealer will invest the same amount of resources in their own in-house warranty program and pricing. They could easily set aside the wrong amount and end up not wanting to pay for claims.


We hope this makes it clearer who to get your next new car from when you’re shopping (hint: Meyer Motors). Contact us today if you wish to find out more about our coverage and who our warranty provider is!

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