How To Choose The Right Type Of Motor Insurance For Your Needs

If you own a car in Malaysia, you need to take out auto insurance.

Under the Road Transport Act 1987, all vehicles on Malaysian public roads must be insured. However, the type of insurance you purchase is up to your needs.

Knowing the differences in auto insurance and knowing the coverage of each insurance is essential to protect our long-term interests.

What Kind of Auto Insurance Coverage Can You Get in Malaysia?

In principle, there are three types of auto insurance in Malaysia, ranging from the most basic protection to one that gives deep insurance to its driver.

types of auto insurance in Malaysia

Source: PIAM

In the insurance world, the “first party” is you (ie the driver), the “second party” is the auto insurance company, and the “third party” is basically everyone.

Here’s how the different types of auto insurance work.

Third party coverage

Third-party coverage insures you against injury or death to another person, as well as loss or damage to third-party property caused by your vehicle.

This policy offers you the minimum level of protection in the event of an accident. With this type of policy, you cannot claim damage to your own vehicle. Liability insurance is the minimum level of coverage a driver needs to renew their road tax and legally drive on the roads in Malaysia.

People who normally look for this type of coverage are those whose cars are old or no longer have a finance agreement (e.g. hire-purchase).

There may also be a “premium load” that a driver must bear. The “premium charge” is an additional amount added to the insurance premium to reflect a higher risk. Some insurance companies may require the driver to obtain other forms of insurance coverage (such as personal accident insurance) in order to secure this policy.

Third party, fire and theft coverage

Liability, fire and theft insurance costs more than liability insurance.

This policy is intended to protect you (i.e. the driver) against third party claims, whether they be personal injury or death, loss of third party property or damage caused. by your vehicle. It is essentially the same as a third party blanket, but with the additional coverage for fire damage and theft of your vehicle.

For this type of policy, the insured amount for third party damage is high (sometimes unlimited), but the insured amount in the event of fire and theft is lower.

Full coverage

A comprehensive auto insurance offering covers a wider range of protection, especially for first and third parties (the first is you, the driver, while the third is everyone). With this type of policy, you get essentially the same coverage as a third party fire and theft policy, but with the additional coverage for damage to your own vehicle (i.e. not just limited to fire and theft).

In the auto insurance industry, the common practice for stolen vehicles or total loss claims is to compensate the policyholder based on the market value of the vehicle at the time of loss (or damage), or the sum agreed in the policy, whichever is lower. . Some insurance companies, however, reimburse the policyholder on the basis of an agreed-upon car value specified in advance in an agreement with the policyholder, rather than on normal market value or resale value.

This policy is normally only available for vehicles that are not over a certain age. You should consider getting this type of policy if you own a relatively expensive car, as the more valuable your car, the more important this policy will be to the driver.

What is not covered by standard auto insurance?

Note that in the three auto insurance packages described above, none of them provide protection against injury or death suffered by the driver or the passenger of the policyholder.

Most standard auto insurance policies have exclusions such as:

  • your own death or bodily injury as a result of a car accident
  • your liability against claims from passengers in your vehicle (except passengers in rental vehicles such as taxis and buses)
  • loss or damage resulting from a natural act (flood, storm and landslide) *
    * subject to additional premiums

Policyholders can always extend their auto insurance coverage to include additional benefits such as acts of nature (flood, landslide and landslide), windshield damage, civil unrest, addition of additional drivers, passenger liability or even additional commercial use.

Auto insurance liberalization since 2017

This decision allowed insurance companies to introduce new products with more flexible pricing according to individual risk levels.

Today, most insurance companies have started selling auto insurance online or through their app. Customers can now compare, apply, buy and file claims for their auto insurance online.

Find out about the different auto insurances offered by auto insurance companies in Malaysia.

This article was first published on October 9, 2012 and has been updated for freshness, accuracy and completeness.

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Jothi Venkat

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