It is really the policyholders’ option. However, it is recommended to insure with COE for the following reasons:

  • Financial institutions that extend the vehicle loans, for credit prudence,
    would generally expect the value of insurance coverage to be at least equivalent
    to the loan amount.
  • By insuring without COE, the insured is assuming the hassle as well as
    the financial exposure in the disposal of the COE refund certificate which
    is usually sold in the open market at a discount. The extent of the financial
    exposure will depend on the extent of the discount which is subject to demand
    and supply dependent on the new car market condition.
  • The saving in premium of 5% is negligible compared to the peace of mind
    received when the vehicles are insured with COE.
About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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