In Malaysia, motor insurance is compulsory for all
motor vehicle under the Road Transport Act 1987. To prevent the case such as motor
vehicle owners not purchase motor insurance, government had implemented the
rule that motor vehicle owner need to have motor insurance before they can
renew road tax.
There are 3 main types of motor insurance in
Malaysia, ranging from the most basic protection to more in-depth assurance to
its driver, namely Third Party Cover, Third Party, Fire and Theft Cover, and
Comprehensive Cover.
Third Party Cover
In the motor insurance terms, the “first party” is you (the driver), the “second party” is the motor insurance company and the “third party” is everyone else. A Third Party Cover is third party car insurance that insures you against any injuries or deaths caused to another person, as well as loss or damage to a third party property caused by your vehicle.
Fundamentally, third party car insurance provides the minimum level of cover to you as required by the law. With third party insurance, you cannot claim for any damages to your own vehicle. Its third party liability means that only third party (not your own vehicle) can claim for damages from your insurer, and you cannot claim for damages to your own vehicle in any accidents, fire damage or stolen.
Third party insurance is normally offered at a cheaper premium if compared to Comprehensive Cover. Third Party Cover is the minimum level of coverage a motor vehicle owner needs to have in order to renew his/her road tax.
People who look for third party insurance are usually those whose cars are old and have completed car loan repayment. Even though Third Party Cover comes with a cheaper premium, with the nature of older cars tend to cause accidents, it could end up costing more.
The process to buy third party insurance is a bit more complicated, as most car insurance companies prefer to deal with Comprehensive Cover. The main reason is the recent rise in road accidents and claims cost, which had made third party car insurance less profitable for insurance companies. In addition, it is rather difficult to estimate the value of old motor vehicle, which is needed to work out the premium on the insurance. Some car insurance companies do not accept the old cars aged above 15 years, while other insurance companies value the 15 years old and above old cars at RM10,000.
For those who are looking at Third Party Cover, there will have a “loading” which a driver has to bear. The “loading” is an additional amount added to the insurance premium to reflect the additional and higher risk the insurance companies had to bear. Some insurance companies require the driver to get Personal Accident Insurance in order to secure third party insurance.
Third Party, Fire and Theft Cover
Basically, Third Party, Fire and Theft cover is the same as Third Party Cover,
with the added car insurance coverage of fire damage and theft
to your motor vehicle. Its third party liability is to protects you (the driver) against claims by a third party,
be it bodily injuries or death, third party property loss or damage caused by
your vehicle and with additional protection to fire damage and theft to your
car.
Comprehensive Cover
A Comprehensive Cover provides wider range of protection for both driver and third party. With a Comprehensive Cover, you basically enjoy the same coverage as in a Third Party, Fire and Theft Cover, but with the added car insurance coverage of own motor vehicle damages.
Comprehensive Cover normally only available for motor vehicle that have not exceed 15 years old. It is advisable to get a Comprehensive Cover for your car insurance if your car is expensive, prone to theft or the repair cost tend to be expensive (especially imported cars with less spare parts available and not popular in Malaysia car market), as the more valuable your car is, the more protection value it offers to you.
Stolen car compensation
The standard car insurance practice for stolen motor vehicle or total loss claims is to compensate the policyholder based on the market value of the car at the time of loss (or damage), or the sum agreed in the policy, whichever is lower. However some insurance companies reimburse the policyholder based on an agreed car value specified in advance in an agreement with the policyholder, rather than the normal car market value.
Exclusions that not protected by above 3 types of car insurance policy:
1.
Your own death or bodily injury
2.
Your liability against claims from your passengers
3.
Theft of non-factory fitted vehicle accessories (car
stereos, leather seats, sports rims etc)
4.
Consequential loss, depreciation, wear and tear,
mechanical or technical breakdown failures or breakages
5.
Loss/damage arising from an act of nature, e.g. flood,
landslide
However,
you may pay additional premium for your car insurance to cover some of the
above exclusions as below:-
Windscreen
Cover the breakage of glass in windscreens, front,
rear and side windows. The damaged windscreen will be replaced and your NCD
will not be affected. Its premium is normally 15% of insured amount.
Legal Liability To Passengers
This coverage protects the Insured against legal
liability to the passenger in the event of a claim.
Legal Liability of Passengers
Covers the legal liability of passengers for acts of
negligence.
Strike, Riot & Civil Commotion
Covers the vehicle against damage caused by strike,
riot and civil commotion.
No Claims Discount
(NCD)
Persatuan
Insurans Am Malaysia (PIAM) has an outline rule for car insurance
companies about discount on no claim car
insurance. If the policy holders do not claim from car insurance
companies for first year and subsequently
years, they will entitle to No Claim Discount NCD from the first year of 25% to
up to 55% in following years as attached NCD image.
This makes a substantial difference
to the overall car insurance premium. If you do claim for damage on your own
car where the damage was caused by you, you NCD will back to square at 0% and
start from beginning. This is car insurance companies intention to encourage people not to claim. If the damage to your
vehicle was by a third party, you will not lose your NCD by claiming from the third
party car insurance
companies. For those who want to replace new
car or sell own old car, remember that NCD is attach to vehicle, not the
driver.
Excess
Excess is the amount that you have
to pay in the event of a claim. For example, if the excess on a car insurance policy
is RM500 and you make a claim of RM1,500, you will need to pay the RM500 and the
rest of RM1,000 will be paid by the car insurance companies.
A Compulsory Excess is stipulated by
PIAM for incidents in which the driver of the vehicle is:
- not listed in the Policy Schedule
- is under 21 years of age
- is a Provisional license driver or held a full driving license for less than 2 years
Loading
A loading is an additional charge on
your policy that the car insurance
companies added to your premium if they need
to bear additional risk, including driver age or experience, age of
vehicle, claims experience, sport and high performance car, carrying capacity, special
vehicles carrying noxious or flammable materials, low loaders, timber/log
carriers & petrol tanker.
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| Motor Insurance |
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| NCD |
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| Road Tax |
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