Do You Know What Your Car Insurance Premium Is Based On?

If you own a car and have paid for your auto insurance without having a clue of what determines your premium, you’ve come to the right place.

Like all other types of insurance, the auto insurance premium rate in Malaysia is subject to regulation and all companies are required to use the same premium rate base.

After the liberalization of the auto insurance industry in 2017, insurance companies usually have their own risk profile to assess what the insurer will ultimately charge for the premium.

This rate is determined by several factors, such as:

1) Age of car owner. Most companies have a similar categorization of age groups. According to PIAM (Persatuan Insurans Am Malaysia), statistics have shown that most serious accidents were recorded by motorists aged 17 to 23. This translates into a higher premium rate for young drivers.

auto insurance premium risk profile

2) Driving experience. This is the number of years the driver has held a driver’s license, not actual driving experience.

3) Nature of occupation. This is determined by whether your job is indoor or outdoor based. For example, sales work is viewed primarily outdoors and will have a higher rate.

4) Discount without complaint (NCD). Each private car owner is entitled to a CRS ranging from 25% to 55%, as provided for in their individual policy. The maximum CRS currently offered is 55%.

7) Motor capacity (cc). This refers to the capacity of your car’s engine or more commonly known as cc. The lower the cc, the lower the premium.

8) Year of manufacture. The year of manufacture or registration of your car will affect the premium. As a general rule, the older the car, the lower the premium.

9) Car type. This is the type of vehicle such as sedan, minivan, SUV or 4WD. Some companies charge differently depending on the type of car.

ten) Type of engine. It is important to know that most auto insurance companies charge a higher auto insurance premium on turbo-powered cars. Some insurers even refuse turbo-powered cars.

11) Gender of car owner. This may not apply to all insurance companies, but some charge lower premiums for male drivers or vice versa. This could be based on their own business statistics used in their risk profile.

As a general rule, if you purchase auto insurance for a new vehicle, the sum insured should match the purchase price. For older vehicles, you need to insure based on market value. It is always better to insure more than less – this way you can be sure that you will receive full payment in the event of a loss.

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If you want to purchase your insurance with a new company but continue to receive an MNT that you had with a previous insurer, you can request a letter proving your MNT status from your previous insurer. Your NCD can also be transferred if you change vehicles.

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