How Does Car Insurance Work? Why Should We Buy Car Insurance?
Car insurance is a form of security provided by the insurance company to the owner or driver of a vehicle against any possible claims for damages and/or losses caused by the vehicle while being used on the road.
The basic structure of a car insurance model works like this: whenever you pay your premium to a car insurance company, your premium, along with the premiums from other policyholders, will go into a large “fund” formed by the insurer. The insurance company manages this fund, and money from the fund will be used to compensate any policyholder in the event of an accident.
Why buy car insurance?
Drivers in Malaysia are required under the Road Transport Act 1987 to buy car insurance – at least a Third Party Cover. Other types of coverage (Third Party, Fire and Theft or Comprehensive Cover) are optional on the part of the driver.
While some of us believe that driving safe on our part would ensure our security as well as others, the data gathered by the General Insurance Association of Malaysia suggest otherwise. According to the Association, the number of motor vehicles involved in accidents has not declined in recent years.
Many people overlook the potential cost of damages incurred and the role that car insurance play in protecting us against these unfortunate events. Having car insurance coverage can help lift the financial burden in the event of accidents or theft to your vehicle. More importantly, it prevents you from being the victim of a dangerous driver.
Compare car insurance
Although the cost of some car insurance packages can be pricey, there are many options that you can choose from, depending on the type and extent of coverage you seek. In Malaysia, the premiums on car insurance are regulated and fixed by Bank Negara – which means, for a particular package or cover, the premiums will be the same no matter which insurance company you choose to go with.
What this means is when you compare car insurance companies, you have to compare non-price features and factors. Some of these features and factors we have identified include:
- Additional value-add services (e.g. free breakdown assistance)
- Ease of renewal e.g. whether you can renew your insurance online
- Complexity of claims process
- Number and location of panel workshops
- Customer service