Tips buying Malaysia Car Insurance
In this post we share some tips in buying Malaysia Car Insurance. We would suggest you to read and understand this before purchase any car insurance package.
When it comes to buying a policy, always:
Check Your Car Market Value
Check the market value price of your vehicle. If it is a new vehicle, the insured value will be the
purchase price. It is important for you to ensure that your vehicle is adequately insured as it will affect the amount you can claim and to avoid over-insurance or under-insurance.
How much should I Cover ?
For a new vehicle, the insured value will be the purchase price while for other vehicles, the insured
value is the market value of the vehicle at the point you apply for the insurance policy. You may check the market value of your vehicle from www.mycarinfo.com.my
- Under-insurance – If you insure your vehicle at a lower sum than its market value, you
will be deemed as self-insured for the difference, i.e. in the event of loss/damage, you will
only be partially compensated (up to the proportion of insurance) by your insurance
- Over-insurance – Should you insure your vehicle at a higher sum than its market value,
the maximum compensation you will receive is the market value of the vehicle as the
policy owner cannot ‘profit’ from a motor insurance claim.
Duty of disclosure
You should disclose fully all material facts, including previous accidents (if any), modification to
engines, etc. When in doubt as to whether a fact is relevant or not, it is best to ask your
insurance company. If you fail to disclose any material fact, your insurance company may refuse
to pay your claim or any claim made by a third party against you. In such cases, you are
personally liable for such claims.
The price you pay for your car insurance will depend on the type of policy selected. The
insurance premium charged by your insurance company is the standard minimum rate in
accordance with the Motor Tariff. You can check car insurance rate here.
However, in addition to the standard minimum rate, your insurance company may impose
additional premiums known as loadings to the premium payable in view of higher risk factors
involved such as age of vehicle and claims experience. Loadings are governed by Bank Negara
Malaysia (BNM) and no insurance company may charge loadings higher than the levels permitted
The premium payable may be reduced if you have no-claim-discount (NCD) entitlement. NCD is a
‘reward’ scheme for you if no claim was made against your policy during the preceding 12 months
of policy. Different NCD rates are applicable for different classes of vehicles. For a private car, the
scale of NCD ranges from 25% to 55% as provided in the policy.
Also known as a ‘deductible’. This is the amount of loss you have to bear before your insurance company will pay for the balance of your vehicle damage claim. The types of excess applicable are as follows:
- Compulsory excess of RM400 – if your vehicle is driven by a person not named in your policy or
a person named in your policy who is under the age of 21, the holder of a provisional (L) driving
licence or the holder of a full driving licence of less than two years.
- Other excess – applicable at the discretion of your insurance company and in some cases, no excess is imposed. You can negotiate with your insurance company on this excess.
The most commonly used loading factors are your age, any adverse driving characteristics, cubic capacity (engine CC), specific claims experience of your vehicle and re-conditioned vehicles. The insurance company can apply a loading on you to ensure that the amount charged commensurates with the risk borne by them.
The insurance cover will compensate your loss by putting you back to the same financial position as you were in immediately before the loss. You cannot profit from an insurance claim.Therefore if your vehicle is more than 5 years old, betterment will apply.
Betterment is, when you repair your vehicle after an accident, and you need to replace one part with a new franchise part, for example, your old bumper is replaced with a new franchise part. The application of betterment however, is at the discretion of your insurance company. If they apply betterment, it will be in accordance with the standard scale of betterment adopted by the industry.
With the implementation of e-cover note in 2005, insurance companies will transit car insurance information electronically to the Road Transport Department (RTD) and you will receive confirmation slip containing details of your motor cover as confirmation of the purchase of your motor insurance. Thereafter, within one month, you should receive:
- the Schedule which shows your name and address, details of the vehicle, the sum
insured (for comprehensive and third party fire & theft policies), the period of insurance,
the policy number, your NCD entitlement, premium breakdown, excess and named
- the certificate of insurance which shows your name, vehicle model, registration number and cubic capacity, period of insurance, authorised drivers and limitations of use. In some cases, this may be issued at the point of purchase in place of the cover note; and
- a motor policy which shows the terms and conditions of cover provided by your insurance company.
How To Cancel
You may cancel your Malaysia car insurance policy at any time by notifying your insurance company in writing, inclusive of the date you want to stop the policy.
It is a good idea to have a new policy in place before cancelling your previous one so there is no gap in between coverage.
Insurance companies also generally offer a refund premium based on how old your current car insurance policy may be, the newer it is when you cancel it, the more refund you will receive.
If you have any other tips on Malaysia Car Insurance, share it in comments. Thanks.
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