Car Insurance In Malaysia – The Different Types Of Motor Insurance
In Malaysia, having a carriage that brings us around is almost a means of survival. While we are eager to select the motor vehicle of our choice, selecting the type of motor insurance is equally vital. Knowing the differences in car insurance out there as well as knowing the coverage of each insurance is essential in protecting our interest in the long-run.
In principle, there are three types of car insurance in Malaysia, ranging from the most basic protection to the one that gives an in-depth assurance to its driver.
Third Party Cover
In the insurance world, the “first party” is you (i.e. the driver), the “second party” is the motor insurance company and the “third party” is basically everyone else. A Third Party Cover insures you against any injuries or deaths caused to another person, as well as loss or damage to a third party property caused by your vehicle.
In essence, a Third Party Cover provides the minimum level of protection to you in the event of an accident. With a Third Party Cover, you cannot claim for any damages to your own vehicle. As such, this type of policy is normally offered at a cheaper premium as compared with a Comprehensive Cover (see below). Third Party Insurance is the minimum level of coverage a driver needs in order to renew his or her road tax and legally drive on the road.
People who normally seek Third Party Coverage are those whose cars are old or no longer under a financing arrangement (e.g. hire purchase). Even though Third Party Cover comes with a cheaper price tag, older cars tend to be more accident-prone, which means it could end up costing more over the long run.
The process to obtaining a Third Party Car Insurance is a little bit more complicated, as most insurance companies prefer to deal with Comprehensive Covers. This is due partly to the recent rise in road accidents and claims cost, which had made Third Party Covers less profitable for insurance companies. In addition, it is rather difficult to estimate the value of old vehicles, which is needed to work out the premium on the insurance.
For those who are looking at Third Party Car Insurance, there might be a “premium load” which a driver has to bear. The “premium load” is an extra amount added to the insurance premium to reflect a higher risk. Some insurance companies may require the driver to get other forms of insurance coverage (such as a Personal Accident Insurance) in order to secure a Third Party Policy. In order to improve your chance of getting a Third Party Cover, it is advisable to remain with one insurer for both motor and non-motor coverage, and maintain a good track record in all accounts.
Third Party, Fire and Theft Cover
A Third Party, Fire and Theft policy is more affordable than a Comprehensive Cover, but pricier than a Third Party Cover.
Essentially what this policy does is it protects you (i.e. the driver) against claims by a third party, be it bodily injuries or death, third-party property loss or damage caused by your vehicle. This is essentially the same as a Third Party Cover, but with the added coverage of damages from fire and theft of your vehicle.
Normally, in a Third Party, Fire and Theft Cover, the insured amount for third party damages is high (sometimes unlimited), but the insured amount on fire and theft is lower.
Comprehensive Car Insurance Cover
A Comprehensive Car Insurance package covers a wider range of protection, notably to both first and third parties (first party is you, the driver, while third party is everyone else). With a Comprehensive Cover, you basically enjoy the same coverage as in a Third Party, Fire and Theft policy, but with the added coverage of damages to your own vehicle (i.e. not just limited to fire and theft).
In the car insurance industry, the standard 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 based on an agreed car value specified in advance in an agreement with the policyholder, rather than the normal market or resale value.
However, bear in mind that not everyone can obtain a Comprehensive Cover, as this policy is normally only available to vehicles that have not exceeded a certain age. It is generally advisable to obtain a Comprehensive Cover if you own a relatively expensive car, as the more valuable your car is, the more significant this policy package will be for the driver.
Note that in all three car insurance packages outline above, none of them provides protection to injury or death sustained by the driver or passenger of the policyholder.
Summary of the Types of Car Insurance in Malaysia
Check out the different car insurance provided by the motor insurance companies in Malaysia.