Malaysia has some of the highest road mortality rates in the world. The number of road accidents in the country have increased over the years with one accident happening every minute in 2022. It’s important to ensure that we have sufficient insurance coverage.
Every vehicle owner in Malaysia is required by law to get a minimum insurance coverage.
The minimum insurance coverage is called the Act cover whereby it covers the third party or the other driver in an accident that could cause death or bodily harm. Car owners need to make sure that their insurance is valid before renewing the road tax permit every year. 
Different Types Of Car Insurance
There are basically four types of car insurance one can get: The act cover, third party cover, third party fire and theft cover as well as comprehensive cover. They differ in the extensiveness of who the insurance covers and what it covers.
Although the Act cover is the minimum insurance coverage vehicle owners need to get, most insurance providers don’t offer it and provide instead the third party cover.
| Insurance | Damage to third party’s property | Death or injury to third party
|
Fire and theft coverage on own vehicle | Damage to own vehicle in an accident |
| Act cover
|
– | Cover | – | – |
| Third party cover
|
Cover | Cover | – | – |
| Third party, fire and theft cover
|
Cover | Cover | Cover | – |
| Comprehensive cover
|
Cover | Cover | Cover | Cover |
There are two kinds of motor insurance policies which are the single rider and all-riders insurance. With the single-rider insurance, only the insured can drive the car.
The all-riders insurance costs 50% more compared to the single-rider policy. The all-riders insurance provides more flexibility in that it allows all other authorised drivers including the insured to ride the car.
Although it is significantly more costly to get an all-riders policy, it’s important to have ample coverage. In the event that a car owner buys a single rider policy and an accident occurs involving a person other than the insured, the car owner will not be able to claim the insurance.
The cost of motor insurance depends on the coverage. The higher the sum insured, the higher the premium will be. You can use this calculator by Etiqa to get an estimated insurance cost.
Using the calculator, purchasing an insurance with a sum insured of up to RM10,000 for a Perodua Myvi would cost you around RM126.90. For the same Myvi, an insurance with a larger sum insured of up to RM25,000 would cost RM162.19 premium.
There’s also a car insurance calculator by Car Base. For example, a comprehensive insurance for a car with a market price of RM70,000 would cost RM1,469.65 annual premium while a third party insurance would require RM1,321.95 annual premium.
Optional Insurance Coverage To Consider
Car owners can always add on optional coverage for floods and other natural disasters as well as windscreen breakage. In addition, you can also purchase liability to passenger and liability to third party caused by passenger.
Liability to passenger is limited coverage to you or an authorised driver from legal liability of causing death or bodily harm to a passenger due to your or the authorised driver’s mistake. Liability to third party caused by passenger protects you from legal actions taken by a third party due to a mistake of your passengers.
If you share your car with others such as your spouse or tend to drive passengers in your car, you may consider these optional add-ons. For those who live in a state that is affected by floods, it might be wise to get extra coverage for natural disasters.
How Much Coverage Is Enough?
The purpose of buying car insurance is to protect your vehicle which is your asset, in the event of an accident, fire, theft or natural disasters. When the vehicle is damaged, car owners would want to be able to recoup an amount that can cover repairs or even get a replacement. So, how do we know if the insurance coverage we purchase is enough?
A good measure is the price of the car. Car owners can check the current value of their vehicle in the market at the time of purchasing the policy as a reference in determining whether the sum insured is sufficient.
What Can You Claim From Your Insurance?
When car owners are involved in an accident, they can make either a third party claim or an own damage claim through a comprehensive policy. Remember, third party cover only provides coverage for third parties, not yourself.
Repair costs: If you’re in an accident that’s not your fault, you can make a third party claim and your no-claim discount entitlement will not be affected. When car owners don’t make a claim on their insurance for a year, they’re entitled to no claims discount (NCD), a discount on their premiums.
The discount percentage varies for different types of vehicles, but it can be anywhere between 25% to 55% for a personal car – which is a significant amount. So, it’s best to refrain from making a claim on your insurance unless it’s a last resort.
For example, A was in an accident with B whereby A was not at fault. A could claim B’s third-party insurance. A would need to submit the claims and have the workshop advise on the damages. Third party motor insurance can cover loss or damage of properties for up to RM3 million.
You can also make own damage claims for accidents where you were neglectful. However, making a claim on your own insurance means that you will lose your NCD.
There’s also an own damage knock-for-knock claim whereby the third party has been proven to be in the wrong, causing the accident you’re involved in. You can then make an own damage claim but this time, your NCD will not be eliminated.
Compensation for actual repair time: Aside from claiming repair costs, car owners can also claim compensation for actual repair time (CART) from the third party’s insurance. This is a compensation based on how many days it takes to repair your vehicle and to compensate you for the inconveniences of not having your car. For private vehicles, you can get up to RM50 CART per day.
You can also choose to claim car rental costs incurred while waiting for your vehicle to be fixed provided that the substitute car is of similar capacity and type.
Theft settlement: On average, 20 vehicles are stolen every day, with Proton Wira being the most sought-after vehicle by thieves.
If your car is stolen and found in good condition later on, you can withdraw the claim you submitted earlier. Meanwhile you can file for a repair claim if your car is found but in a damaged condition. For vehicles that are severely damaged, the insurance company may offer you a total loss settlement in a lumpsum.
Theft claims can be more complicated as there will be investigations and court proceedings involved. In general, owners will receive the settlement six months after the theft was reported or investigations completed, depending on which is earlier.
Purchasing car insurance is regarded by some as just a requirement to drive on public roads. But a minimum insurance coverage may not be sufficient to you. A car is a big purchase and car insurance protects you financially in the event of an accident or theft. You can receive compensation to repair your damaged car or even a lumpsum payout if your car is lost to theft.
Without sufficient insurance coverage, you will have to fork out your own money to fix your car or worse be liable to damages incurred upon third parties. It’s also important to consider extra coverage and think about factors like natural disaster risks and if your vehicle is a shared vehicle.
Featured Image Credit: Jabatan Pengangkutan Jalan Malaysia
Follow Us On Telegram & Instagram!
Join our Malaysia Telegram channel (@dollarsandsensemy) and follow our Malaysia Instagram Page (@dnsmalaysia) as we bring you the latest finance content in Malaysia!
