Car Insurance Overview
In Malaysia, with the increase in the number of vehicles, it has become an imperative to insure your car. A car insurance policy protects you and helps safeguard your vehicle from any sort of damage or injury incurred due to accident, theft, fire, etc. The different types of motor insurance policies available in Malaysia include, Comprehensive Cover, Third-Party, Fire and Theft Insurance Policy, and Third-Party Insurance Policy.
Types of Car Insurance Policies and Coverage
- Third-Party Insurance Cover: It is a basic type of insurance cover in which loss and damages to the vehicle of a third-party, and bodily injuries or death of the same is covered. You cannot claim any damage caused to your own vehicle with a Third Party Cover.
- Third-Party, Fire and Theft Cover: This policy covers death or injuries to a third-party or damages caused to their vehicle. It is same as the Third-Party cover just that the policy additionally covers your own car against damages or losses caused due to fire or theft.
- Comprehensive Insurance Cover: As the name suggests, this policy provides a wider range of protection - both to the first party and the third party. You get to enjoy additional coverage on damages caused to your own vehicle with this motor insurance policy.
Covers offered against types of car insurance policies:
|Cover offered on||Comprehensive Cover||Third-Party, Fire, and Theft Cover||Third Party Cover|
|Third-party death and injury, vehicle damage||Yes||Yes||Yes|
|Own vehicle loss and damage due to theft or accidental fire||Yes||Yes||No|
|Damage and loss of your own vehicle due to accident||Yes||No||No|
|Liabilities to passenger (death, injury, or car damage)||No||No||No|
Features and Benefits of Car Insurance Policy in Malaysia
- As per your preferences, you can choose from 3 types of car insurance policies - Third-Party Insurance Cover, Third-Party, Fire and Theft Cover, and Comprehensive Insurance Cover.
- Your premiums are decided based on age and make of the car, its market value and an applicable No Claim Discount (NCD). Your location may also play an important part in deciding your premium, as higher premiums are charged for accident-prone areas.
- Most of the policies also come with free towing and roadside assistance services. This means, you don’t need to worry about additional towing costs and minor repairs in an emergency situation.
- You can reduce the amount of your insurance premium if you are eligible for a No Claim Discount.
- You can also purchase additional covers with your car insurance policy, such as, windscreen cover, protection from flood, landslide, or other natural calamities, personal accident, and medical benefit cover for a driver, etc.
Why Do You Need Car Insurance?
A car insurance policy is important to give you financial cover whenever there is a damage or injury involving your vehicle in case of an accident. Any claims of property damage, physical injuries, death, etc., made by a third-party will be covered by your motor insurance policy.
Car Insurance Policy Eligibility in Malaysia
To purchase a car insurance policy in Malaysia, you need to fulfil the following criteria:
- You need to have a valid driving licence.
- You need have the valid road tax permit.
- Car registration card
- Any other document as specified by your insurance provider
Which Car Insurance Is Right for You?
If you are looking to purchase a car insurance but wondering which one could be the best suitable for you, consider the following pointers:
- What type of cover you are looking for (Comprehensive, Third-party, or Third-Party Fire and Theft)
- How much of premium instalment can you afford to pay
- What is the type and make of your vehicle
- Do you require any add-on covers
After studying all these aspects, you will get an idea of the type of insurance cover that is ideal for you. It is also advised to check the online ‘Car Insurance Calculator’ tools to know the type and amount of premium applicable for you. This way, you can choose a perfect scheme of vehicle insurance policy for your car.
Car Insurance for Foreigners (Expats)
If you are a foreigner or an expat in Malaysia, you can still purchase a new or used car in the country. However, it is compulsory to buy a motor/vehicle insurance policy for your car. You can obtain any one of the specified car insurance covers. You need to present a set of mandatory documents while getting an insurance including your valid passport.
Car Insurance Exclusions
Even when your car insurance policy offers an extensive protection, there are certain exclusions that are not covered under any type of insurance schemes. Let’s take a look at some of the prime omissions from a car insurance cover:
- Your own bodily injury or death
- Damages caused to the vehicle when the driver is under influence of alcohol
- Damages caused due to natural calamities like earthquake, flood, etc.
- Wilful damages caused to the car by the owner
- Loss or damage to the car while being used for illegal purposes
- If the driver does not have a valid licence
- Harms caused because of war, terror attacks, or any other such incidents
- Your liabilities against claims made by your passengers
However, for many of these exclusions, you can still buy an add-on cover by paying some extra premium to your insurance provider.
Things to Consider Before Buying Car Insurance
A thorough research should be a part of your homework when buying a car insurance policy. After all, you do not want to end up buying a policy that charges an extravagant premium for your basic model car. Hence consider the following things before purchasing any scheme:
- How Will De-Tariffication Affect Me?
Motor detariffication that came into effect from 1 July 2017, has introduced a risk-based approach in deciding the calculation of your car insurance premium. Through de-tarification, premium pricing for all types of car insurance covers are liberalised and now it will be determined by the respective insurance providers. De-tarification will affect a regular insurance buyer because:
- Insurance companies will consider the factors like, gender and age of driver, occupation, claim history, etc., to determine the insurance premium.
- To stay in the competition, new types of insurance related products or covers can be introduced.
- You may also get an insurance policy for a cheaper rate due to the increased competition in the market.
- The insurance premium cost may decrease/increase as per the provider’s command and for the same vehicle, the insurance plan’s cost might defer with different policy providers.
- How Can You Prepare For It (De-Tarification)?
You need to consider the following factors to be prepare for de-tarification if you want to avoid paying excessive premium on your insurance policy:
- Compare policy rates of different companies
- Choose add-on covers that are necessary for you
- Research about the ‘claim approval’ ratio of the company
- What Are The Factors That Determine The Premium?
The premium of a car insurance policy is determined by the following factors:
- Type and make of car
- Year of manufacture or age of the vehicle
- Type of fuel used
- Applicable No Claim Discount
- Age and gender of a car owner, etc.
- No Claim Discount (NCD) Rate
A No Claim Discount or NCD is a mark-down offered on the cost of a car insurance cover premium if you have not made any claim against your policy for previous 12 months. You get up to 55% discount on your premium amount under NCD. Rates of NCD are as follows:
|Insurance Period||Vehicle (Private)||Vehicle (Commercial)||Motorcycle|
|5th Year and above||45%||25%||25%|
Factors that Affect the Premiums
The factors that affect the premiums are as follows:
- Location: The base value of the insurance will be affected by the location. The base rate differs if the car is in East Malaysia or West Malaysia.
- Total insured value: The total insured value is what you are going to insure your vehicle for and it is acceptable for you to over insure or under insure your car. If you under value your car, you will get compensated for the amount insured only and you will have to bear the additional costs. Overvaluing your car will mean that you have to pay higher premiums, but the insurance company will compensate for the market value of the car only.
- Cubic capacity: The size of your engine is also a deciding factor.
You will get a no-claim discount on your policy if you have not made any claim from the previous year. The discount rate is regulated by Bank Negara Malaysia and General Insurance Association of Malaysia. This discount can reduce the premium amount by up to 50%.
Factors that Influence Risk for an Insurance Company
Following are the factors that influence risk for an insurance company:
- Age of driver: The premiums increase if the driver is less than 26 years old and if he or she is more than 69 years old.
- Age of car: If the cars age is above 10 years, the premiums will become expensive.
- Claims made: If you have frequently made claims, the chances of premium rates increasing are higher.
- Reconditioned vehicles: The adjusters will have to evaluate the condition of the reconditioned car and then decide on the interest.
- High-performance vehicles: The high performing vehicles will have a higher premium.
- High-risk theft vehicles: Cars that have been listed as high risk theft vehicles will be charged a higher premium.
The following optional coverage can be purchased:
- Windshield insurance: If your windshield has been damaged, this insurance will cover the repair cost or replacement. This will not affect your no-claim discount.
- Special perils: You will get covered if your car has been damaged by landslides, floods, earthquake, etc.
- Audio and accessories: You get covered if your car accessories are damaged. This will not affect your no-claim discount.
- Number of authorised drivers: You can increase the number of authorised drivers in the policy by paying a premium.
- Gas conversion kit and tank: You get cover for Gas conversion kit and tank.
- Number of seats: A certain premium is charged for cars with more than 5 seats.
- Legal liabilities of passengers: This is useful to cover legal liabilities of your passenger for negligence.
- Compensation for assessed repair time: This is compensation provided for your time that your car was in the workshop for repairs.
- Legal liabilities to passengers: This is used in the event the passengers from your car sue you for negligence
Based on the driver’s history, most insurance companies charge an additional premium to compensate for the risk that they are taking.
Most insurance companies issue car insurance for cars that are less than 15 years of age and whose minimum value is RM10,000. If the age of the car and the minimum value are exceeding, the risk is high and the insurers charge a high interest rate.
When Might An Insured’s Claim Be Rejected by A Car Insurance Company
Some of the claim restrictions of a motor insurance varies of the policy that the car insurance company is providing, but the following are the general exceptions that an insured has to keep in his/her mind:
- In the case of death or bodily injury to the insured or the driver of the insured vehicle caused by a motor accident. For covering the car owner or the driver the personal accident insurance or medical insurance will help the individual financially.
- The passenger is also exempted from claiming any amount in the case of a motor accident if he/she was in the insured’s car. However, certain car insurance companies offer the advantage of paying higher insurance premiums that includes Passenger Liability Extension Cover, in case the passenger sues the driver or owner of the car. In such cases the insured or driver is liable for the passenger.
- If the insured vehicle has any non-factory fitted accessories such as sports rims, car stereos, leather seats, etc and they get stolen, you cannot claim any amount. Hence, it is advisable to add security systems to your car to ensure that your precious vehicle accessories do not get stolen.
- If the vehicle has been through depreciation, consequential loss, wear and tear, mechanical, technical breakdown failures, or breakages the claimable amount gets lower. However, remember to read the car insurance company’s definition on the above mentioned situations as it may vary on the provider.
- Note that it is very difficult to get an insurance for your vehicle if its over the age of 15 years and the depreciation of the car price amount may also affect the ultimate claim amount even if your are able to get an insurance for your old car.
- In the case the car has been subject to damage due to acts of nature such as typhoons, earthquakes, landslide and floods you will not be covered for the consequences to your car. However, some insurance companies do provide you the option for paying higher premiums to avail claims even for the passengers under such circumstances.
Car Insurance Premium Calculator
A car insurance premium calculator provides you tailored quotations from various insurance providers. The estimations are dependent on the model of your car, current condition (new car, used car, etc.), market value, type of fuel used, location, etc. Find of the benefits of using a car insurance premium calculator:
- Through an online car insurance calculator, you can obtain information regarding your payable premium, etc. much quicker compared to the available offline methods.
- A car insurance premium calculator saves your money that you would have paid to an agent to gather information about various insurance policies available.
- You can get an estimate for all types of vehicles, new, old or modified.
How Do You Buy Car Insurance in Malaysia
You can buy a car insurance policy via both online and offline methods.
Offline method: You can hire an agent or visit the office of an insurance provider to purchase your desired car insurance policy.
Online method: You can go to the official website of an insurance provider and submit the necessary form for your preferred insurance policy. Here, you can opt for a online payment procedure to make your purchase.
How to Claim Your Car Insurance Online
You can claim your car insurance online by visiting the official website of your insurance provider and filling up a ‘claim form’ available on the website. Here, you may have to provide the details of your claim including the cause and damage occurred, type of your insurance cover, and other details regarding the policy. After submitting the form successfully, a company representative will call you regarding the further process.
Documents Required for Filing Car Insurance Claim
- A copy of identity card or passport
- A copy of driving licence
- A copy of vehicle registration certificate
- Photographs of damage/accident (if available)
- Draft of police report
- Road tax receipt
- Any other documents a requested by the insurance provider
Renew Car Insurance
You can renew your car insurance policy through both online and offline techniques.
Offline method: You can tell your agent to renew it for you or you can also visit the nearest branch/office of an insurance provider to renew your relevant car insurance policy.
Online method: You can go to the official website of your insurance provider and fill in a renewal form. On completing the necessary procedure and making the payment, you will receive the details about your policy renewal.
Car Insurance FAQs
Q. Will I lose my NCD if I make a claim against my insurance policy?
A. Yes, you will lose your No Claim Discount once you make a claim against your insurance policy. To earn NCD again, you will have to go claim-free again for 12 months.
Q. Is road tax receipt mandatory while renewing a car insurance policy?
A. Yes, you must renew your road tax to get a car insurance cover.
Q. What should I do if I need a roadside repair assistance for my car?
A. Your insurance policy may or may not offer roadside assistance for minor repairs and towing for your vehicle. If you want to obtain roadside assistance from your insurance provider, you can call up to the customer care number of your provider and request a service.
Q. What happens if I do not have an insurance cover?
A. If you do not have an insurance cover or if you have not renewed it within the permitted timeline, you will have to pay a hefty penalty of up to RM3,000. Moreover, you will not be able to get your road tax receipt until you get your car insurance policy. Apart from that, on getting caught, your name will be recorded in the offenders’ list which may be further damaging for you. Also, on getting involved in an accident, you will have to pay the costs for damage and losses for a third-party from your own pockets.
Q. Can I lose my NCD if I claim for my add-on covers?
A. If you make a claim for additional covers that you have purchased apart from your insurance policy, you will not lose you No Claim Discount.
Q. Will my car accessories such as music system, be covered under my motor insurance policy?
A. Non-factory fitted accessories of a vehicle such as stereo, sports rims, etc., are also not covered under a car insurance policy.
Q. Where should I make a claim if I am injured by an uninsured vehicle?
A. On an occasion when you fail to make a third-party claim, you can make a claim to the Motor Insurers’ Bureau of Malaysia (MIB). The MIB provides a compensatory amount to the sufferer for his/her bodily injuries and any loss or damage of your vehicle/stuff will not be compensated by the bureau.
Q. What is a compulsory excess?
A. Compulsory excess fee is an amount of money you need to pay when you make any damage or loss claim against your insurance policy. The excess is deducted directly from your insurance claim.