Accidents can happen anywhere. Even if you are the most careful driver out there, these incidents can happen unexpectedly – whether it is a small bump or a major collision, car insurances are essentially your savior in these situations.
In Malaysia, car insurance is a necessity and requirement by law when you purchase a vehicle. However, there are various types of car insurance in Malaysia, with different coverage points, as well as terms and conditions.
So, here is what you need to know about car insurance in Malaysia, from coverage to claims.
Things You should know about Your Motor Insurance
Car insurance serves as long-term protection. Generally, motor vehicle insurance is a policy that protects vehicles such as cars, motorcycles, buses, and lorries from unforeseen risks such as theft, as well as accidental damage.
Of course, as with most products, there are always nitty-gritty details that you have to pay attention to.
Insurance plans are separated into three main types, Third-Party Cover, Third-Party Fire and Theft Cover, and Comprehensive Cover. Additional coverage for your car may include:
- death or bodily injury due to a motor accident;
- liability against claims from the passengers in your vehicle; and
- loss or damage from acts of nature such as flood, storms or landslides
- windshield breakage, which will help you replace it in the case of damage.
Most insurance policies will offer additional coverage options, known as insurance riders, which are optional. However, you may want to consider additional coverage based on your driving lifestyle – for example, driving on rough terrains where you may be more susceptible to damages.
3 Types of Car Insurance Coverage
In Malaysia, there are three types of motor insurance policies available in the market that offer various types of coverage with different terms and conditions according to the respective insurance companies.
- Third-Party Coverage
Third-party coverage is the most basic vehicle insurance coverage policy. The third party in this coverage refers to another individual involved in the event of certain unforeseen situations. This coverage policy protects third parties or other individuals from injury or death. It includes damage or loss to a third-party’s property as a result of an accident caused by your vehicle. However, third-party insurance offers relatively limited coverage. This policy can only be used for third-party claims and cannot be used to make a claim for damage to your vehicle.
Therefore, this policy is offered at a lower price as compared to other insurance policies. In Malaysia, every motor vehicle must have at least a third-party insurance policy to enable a vehicle to be used on the road. The use of valid insurance can also facilitate road tax renewal and prevent you from being sued.
- Third-Party Fire and Theft Coverage
Third-Party Fire and Theft Coverage is somewhat similar to the third-party coverage but this policy also includes an additional protection policy that covers vehicle damage due to fire or theft. Just like third-party insurance, this policy protects the driver from third-party claims covering property loss or damage to third-party property, bodily injury, or death caused by your vehicle. Typically, this insurance coverage is more expensive than third-party insurance but cheaper than comprehensive insurance.
- Comprehensive Coverage
Comprehensive coverage is the most comprehensive vehicle insurance coverage policy. It offers the same coverage as third-party, theft, and fire insurance policies with the additional coverage on your own vehicle. This is not limited to theft or fire only. In other words, this type of insurance not only protects the third party (other individuals) but also protects the first party (you). In Malaysia, new cars purchased through bank loans are required to purchase this type of policy. However, you may not need this comprehensive policy if you own a car at a cheaper price (the estimated cost of repairs is not too large and can be self-financed) or own an old car.
Additional Car Insurance Coverage
Here are some additional protections you may want to consider:
- Additional Drivers
- Policyholders – Free
- Second driver – Free
- Third driver – RM10.6*
- Fourth driver – RM21.20*
(charges may vary depending on the insurance company)
- Optional Protection
- Windshield insurance (windscreen or windshield) – usually 15% of the value of the windshield;
- Special peril – usually 0.25% of the sum insured;
- SRCC (Strike, Riot and Civil Commotion) – usually 0.3% of the amount to be covered;
- Car accessories – usually 15% of the value of the accessory;
Others- please consult your insurance company.
What are Special Perils?
These are known add-ons that cover situations like floods, landslides, storms, and more. While it is common to assume that you don’t live in a flood-prone area, sometimes it is better to be safe than sorry. It is good to survey the market and go for better plans that sometimes provide special offers.
So, here are five types of special perils offered by car insurance in Malaysia
Windscreens, windows, or sunroof
There is a high probability that you know an owner that has encountered a stone chip on their vehicle while driving on the road. Whether the incident cracked the windscreen, this additional premium extends the coverage to all exterior glass on a vehicle. This includes the front and rear windscreen, side window glasses, sunroof, and even the cost of any tint or security film that you have applied on the glass. The add-on only costs 15 percent of the insured windscreen value, but is an excellent addition as it does not affect your NCD when making a claim.
Flood, typhoon, storm, and landslides
It is natural to think your vehicle would be safe from floods and landslides. But with the torrential rain that Malaysia receives, it would be better if you opted for this (part of the ‘special perils’ section) the next time you renew your motor insurance. Water damage is not a cheap fix and could cost you a significant sum especially if it involves mechanical parts. However, this add-on only costs 0.5 percent of the premium. So, if the vehicle is insured for RM70,000, this will only set you back by RM350.
Accessories fixed to your vehicle
Whether it is an expensive sound system, high-end rims, or infotainment units, these items are not insured by your standard insurance plans. However, you can get these accessories insured with an add-on that will cost 15 percent of your annual coverage. While it may not seem like much, if you insure these items for RM10,000, the premium will set you back an additional RM1,500. It is best to check with the insurance provider on what is included, as it will be easier to decide on if it is worth adding.
Strike, riot, and civil commotion
Strike, riot, and civil commotion rarely occur in Malaysia, especially in tourist spots in the city. Your vehicle should be safe unless it is parked in an open space, by the roadside, in a dark alley or amidst a planned protest. Despite costing only 0.3 percent of the insured sum, this option is seldom chosen unless you think it is necessary. To be on the safe side, be wary of where you park your car next.
Legal liability to and of passengers
Legal liability to a passenger comes into view when your passenger decides to take legal action against you for causing damage to their property or injury to a loved one. While the former is less likely to happen, the legal liability add-on coverage of a passenger extends to them should they have an accident that involves a pedestrian, cyclist, or motorcyclist – such as opening the car door that accidentally injures a passer-by.
Betterment charges waiver
This only applies to a vehicle that is up to 15 years old. The older the vehicle, the betterment rates will be higher. Should the third party be fully liable for causing the accident, he or she will not be responsible for the aging and depreciating value of the car. In practice, non-moving parts of a car such as a car door, bonnet, mudguard, or boot cover, depending on the condition, will be repaired instead of replaced.
Certain insurance providers offer extra benefits, depending on the policy. Some also have extra servicing office branches for any assistance you may require, such as to check with the offices for claims or any forms you may have to fill out a form.
Premiums are your payments to the insurance providers. The cost of every insurance policy is determined by a few factors – this includes the market value of the car, the size, capacity, coverage, as well as the number of drivers per car. Now that insurance is heading to denitrification, premiums will be based on the risk behavior of the consumers.
No Claim Discount (NCD)
The NCD is a discount provided when you do not make any insurance claims during a specified period. In Malaysia, the percentage of this increases year-on-year on the condition that no claim has been made. For private cars after the fifth year onwards, the rate is 55 percent. One thing not many people know is that in the event that the accident was caused by another party, you are able to claim your insurance without losing your NCD. Your NCD is only lost if there is someone claiming against you.
Should you decide to make a claim on your insurance for major damage, the “Own Damage Claim”, and the “No-Fault Own Damage Claim”, depends on the cause of the damage or accident.
As a standard procedure for making an “Own Damage Claim”, you should:
- Report to the police within 24 hours, as required by law.
- Send your vehicle to an authorized workshop for immediate attention. Certain insurance companies have a list of panel-authorized workshops that will identify the cost and sort out the repairs.
- Collect the claim from your insurance company and sign accordingly.
- Submit the following documents:
- original police report;
- repairer’s or workshop’s estimated cost of repairs; and
- copies of your insurance policy, vehicle registration card, road tax disc, identity card, driving license of the vehicle owner and driver (if the driver is different), plus the hire purchase agreement (if applicable).
For “No-Fault Own Damage Claims”, you will need to add on copies of the following documents where applicable:
- a signed declaration letter (for No-fault accident);
- third party’s police report; and
- police compound or findings.
Do note that the procedures above depend on your insurance provider.
A Comparison Between Each Coverage
A wide range of car insurance options are offered in the market with various types of additional coverage according to your needs and budget. The price of these insurance depends on the type of policy or insurance company you decide on. However, you may want to consider the following when choosing the right car insurance for you:
- value-added services such as emergency assistance (tow truck) at no extra charge;
- vehicle insurance renewal facility online or online;
- uncomplicated claims process;
- accessible and comprehensive panel workshop location; and
- efficient customer service.
|Third-Party Coverage||Third-Party Fire and Theft Coverage||Comprehensive Coverage|
|Damage to Third-Party Property||/||/||/|
|Lost/Damage to Your Vehicle|
Compensation by the insurer to the policyholder is standard practice after a vehicle theft or loss claim is made. The amount that will be received by the policyholder may adhere to one of three key factors, which are :
- the market value of the vehicle at the time the damage or loss occurred;
- the value agreed in the policy; or
- any that is priced the least.
However, a refund will be given by the insurance company to the policyholder based on the value agreed in the agreement regardless of the current market price or resale price.
So, now that you are well-versed with car insurance in Malaysia, we hope that you’ll continue to stay safe on the roads and choose your coverage wisely. Until next time, happy driving!
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