Car Insurance in Malaysia – From A to Z in Simple Explanation

Car Insurance in Malaysia
Having third party car insurance is mandatory if you own a car in Malaysia.
If you don’t buy or renew your third party car insurance, you will not be allowed to renew your vehicle’s road tax and you, therefore, will risk getting a penalty of up to RM 3000 if you are found driving without a valid road tax.
A car insurance policy is important because it will protect you from having to bear the entire financial burden that may be brought about by an accident.

 

Types of Car insurance in Malaysia
There are usually three types of motor insurance policies available in Malaysia. These include Third Party Coverage, Third Party, Fire and Theft Coverage, and Comprehensive Coverage.

  • Third Party Coverage

This is the most basic policy that only pays for damages of the third party i.e. driver/passenger and car that you had an accident with. The policy is designed to cover all the injuries or death of the third party and the repairs to his vehicle.

It is a requirement by law for every vehicle to have this policy.

This cover does not provide any protection to you as the first party. If an accident happens and you are the one at fault, you cannot claim against this cover for the damages to your car, or bodily injuries that you might suffer.

  • Third Party, Fire and Theft Coverage

This cover not only protects the third party from damages caused by your car, but it also covers you from any events of fire or loss to your own vehicle.

  • Comprehensive Coverage

This policy is the best of the three. Not only does it cover the third party and damages that may be caused by fire or loss of your own car, but it also covers all the other damages to your car that may result from an accident.

Below is a summary of the coverage of the three premiums:

Cover Third Party Cover Third Party, Fire & Theft Cover Comprehensive Cover
Property loss/Damage and injuries/death of third party Yes Yes Yes
Loss / damage to own vehicle due to accidental fire / theft No Yes Yes
Loss / damage to own vehicle due to accident No No Yes
Injuries/death of driver/passenger of own vehicle No No No

Extensions
These three policies will however not cover certain losses such as your death or injuries due to an accident, liability of claims from your passenger, or even any damage that might be caused by acts of nature such as landslide, floods, hurricanes, storms etc. However, you can opt to pay extra premiums to further extend your insurance coverage.

Insurance companies allow motor policyholders to extend their cover by including some more benefits. Talking to your insurer will help you decide on the additional covers that you may need to include to your standard policy.

  • Acts of nature like storms, hurricanes, typhoons, earthquakes, landslides etc
  • Windscreen and windows breakage
  • Riots and strikes
  • Additional named drivers
  • Passenger liability
  • Tutoring and other business use
  • Accessory and audio cover
  • Liabilities of passengers for negligence

 

Factors that May Affect Your Premiums
There are several factors that influence the base premium of your car insurance. These factors include your location (whether the vehicle is in the East or West Malaysia), the total insured value of your vehicle (depends on its market value), and the cubic capacity of the vehicle (the size of the engine).

The premiums are usually tariffed by the General Insurance of Malaysia and Bank Negara of Malaysia.

There are also other aspects that may cause the insurer to increase the premiums required for your insurance. These factors are known as loading and they raise the risks the insurer has on a vehicle.

  • Age of driver( less than 26 years or above 69 years)
  • Age of the vehicle(more than 10 years)
  • The Condition of the car(reconditioned or second-hand car)
  • Frequency of claims
  • High performance /Sports cars(they incur extra loading)
  • High-Risk Theft Vehicles( Cars listed here will incur more loading)

No-Claim Discount
You are entitled to a no-claim discount if you go for a year without making a claim against your policy. Different classes of vehicles have different rates with a private vehicle gaining the most NCD that starts from 25% up to 55%. The discount is standard in all insurance companies in Malaysia and it keeps increasing every year you go claim-free.

 

How to Make a Claim
Accident Claims
If you get into an accident and you have a comprehensive policy, you have an option of making an own damage or a third party claim.

Own Damage Claim
This refers to a claim on your own insurance policy i.e. comprehensive. However, you will lose your NCD entitlement. You should inform your insurer immediately the accident happens and ask to be referred to an approved workshop where your vehicle will undergo the necessary repairs. Also, make sure that you fill in the Motor Accident Report Form and submit it together with all the supporting documents to your insurer.

Own Damage knock for Knock Claim
When a third party is the one to blame for the accident and you have proof from the police that you are not at fault, your insurer will pay for your damages through an ‘Own Damage Knock for Knock claim’ and you will be able to retain your NCD.

Betterment
In a case where your vehicle is more than 5 years old, you will be required to contribute to the new spare parts needed for the repairs of your vehicle according to the scale below:-

Age of your car Rate applied (%)
< 5 years old 0
6 15
7 20
8 25
9 30
10 35
10 and above 40

Third Party Claim
If you are not the one at fault in the accident, you can make a third party claim and your NCD will not be affected. There are two ways to make this claim i.e. you can submit the claim to your own insurance company (for faster processing) or you can submit it to the third party insurance policy.

As a third party claimant, you will be required to appoint a licensed adjustor to assess the damage/loss. Submit the adjustors report together with the completely filled Motor Accident Report Form and other supporting documents immediately.

Theft Claim
If your vehicle is stolen and you make a theft claim, you must be patient and completely comply with the insurance official and police as they investigate the claim. You should usually be able to receive the settlement offer within six months after your notification or when the investigation is completed (whichever is earlier).

In case your vehicle is found before your claim is settled, you can withdraw your claim if the car is in good condition or you can convert the claim to a repair one if it is damaged. If the damage is really serious you can get a “total loss” settlement.

Conclusion
No matter how good of a driver you are, you can never predict what happens on the road. That is why it is good to be prepared and keep your car insurance and road tax update.

Personal Accident Insurance – What(s)? Why(s)? How(s)?

Accidents are unexpected, unpredictable and may sometimes have a dire life-changing effect on you and your family. A serious accident can leave you and your family in major financial crises especially if you are the sole breadwinner or a major contributor to your family’s financial needs.

This is why personal accident (PA) insurance is important for you and your family. It takes up the entire financial burden that is brought by the accident and makes sure that your family is taken care of if the accident is fatal.

What is Personal Accident Insurance (PA)
Personal Accident Insurance (PA) is defined as an annual policy that offers compensation in the event of an injury, disability, or death caused exclusively by violent, accidental, external and visible events.

Different insurance companies determine the meaning for ‘violent, external and visible events’ but it must be determined that the result of the unfortunate event was out of your control, otherwise the insurance company will not pay.

Personal Accident Insurance Different Classes
If you want to purchase a Personal Accident Insurance cover, you will realize that there are categories and classes that policyholders are placed depending on their occupation and risks. Each insurance company has a unique method that it uses to classify the various occupations and related risks.

Here is a general classification method of the occupations:

  • Class 1

For occupations that involve non-manual activities such as administrative, managerial and clerical work.

  • Class 2

This is for occupations that involve sales, marketing, supervisory work and duties that include traveling. They should not be involved in manual labor or the use of tool and machinery.

  • Class 3

These are for persons involved in manual labor that is not particularly hazardous in nature but requires the use of tools and machinery.

These classes are important to both the insurer and the potential customer.

For you as a potential customer, the classes will help you determine the plan that best suits your needs whereas the insurer is able to determine the risk that is associated with each occupation thereby advising the customer accordingly.

Personal Accident Insurance Coverage and Exclusions
The coverage of a personal accident insurance plan varies from one insurer to the other so, before purchasing a PA plan, make sure that you take your time to read and understand the fine print to ensure that it meets your needs.

In most PA plans the types of coverage include:

  • Accidental death: – The coverage amount that is paid to your closest family member in case you die in an accident.
  • Funeral expenses: – The amount that your insurer will pay for your funeral expenses if you die in an accident.
  • Medical expenses: – Your medical expenses in treatment and services of injuries and disabilities you get from an accident.
  • Permanent Total/Partial Disablement: – You receive a cash payout in case you can no longer work or perform basic tasks following an accident.
  • Temporary Total disablement: – You receive cash compensation if you temporarily cannot work due to a permanent disablement.
  • Hospitalizations benefits: – These are cash benefits you receive when you are admitted to a hospital following an accident.
  • Repatriation benefits: – In case you need to seek medical care in another country your insurer caters to your travel expenses.

In case you find this basic coverage insufficient, you can also opt to buy additional coverage to increase your cover:

  • Double Indemnity:-That covers death that happens when using public transport which is normally twice the amount of accidental death coverage.
  • Personal Liability: – It covers you in case you are forced to pay for another person’s property damage or injuries.

However, Personal Accident cover excludes injuries, disabilities, and deaths caused by the following factors:

  • War
  • Terrorism
  • Suicides/Insanity
  • Self-inflicted injuries
  • Pregnancy/Miscarriage/Childbirth
  • Involvement in unlawful activities
  • Dangerous sports and activities
  • Riding motorcycles
  • AIDS
  • Pre-existing physical defects and infirmity
  • Provoked murder and assault

Also, PA insurance does not cover people in certain occupations that may be termed as hazardous including law enforcement officers, race car drivers, aircraft testers, fishermen, pilots, and aircrews, or those involved in high-risk recreation activities including bungee jumping, scuba diving, rock climbing, and skydiving.

It is vital that you check with your insurer or your agent on what they do and do not cover before you proceed with purchasing a policy.

How Personal Accident (PA) Insurance Works
Personal Accident Insurance cover is designed to provide a lump sum amount to the policyholder for the all the expenses related to the accidental event. This means that if an accident happens and the policyholder either dies or is disabled, his/ her PA Insurance provider will offer a huge sum of money which will vary depending on the amount of premium paid on all the respective coverage.

The PA also covers your medical expenses if you are being treated for an injury caused by an accident up to a certain amount. If the injury is serious and requires you to be transported for treatment to another country, your PA will also pay for your repatriation expenses.

Types of Personal Accident Insurance Plans
Personal Accident Insurance is commonly divided into five types:-

Individual Plan Covers the policyholder
Couple/Partner plan Covers married couple
Children Plan Covers the children of the policy holder
Family Plan Covers the family members of the policy holder
Takaful A cooperative policy where participants contribute funds through donations.

 

It is important to note that every insurance company has its own designed plans that cater to specific groups of people. Some insurers even have a special PA Insurance plan that is designed for full-time students. You should, therefore, take your time to check with your insurance provider the best plan that suits your situation.

What do Insurers Require to Approve Personal Accident Insurance Policy?
Applying for a Personal Accident Cover is quite easy though there are some few things that will determine whether your policy application gets approved or rejected. They may also decide the amount that you will be required to pay on your premium. Make sure that you include all these details correctly and truthfully.

  • Medical history( In case you have a pre-existing illness, have undergone surgery, or use prescription medicine)
  • Your family’s(Immediate) medical history
  • Occupation
  • Lifestyle habits(Drinking, smoking, drug use, regular traveling, hazardous hobbies)

There also things that can not only affect your PA Insurance application but can also land you in trouble with the police and also make your policy void. These are the things that you should completely AVOID doing.

  • Misrepresentation- by providing false and misleading information
  • Fraud- faking your own death
  • Concealing of material facts- by withholding important information

How to Make an Insurance Claim
Making a claim in Malaysia may differ from one insurer to the other since not every insurer requires the same documents and forms. So it is important to fast check with your insurer before so that you don’t get disappointed and frustrated afterward.

Also, every situation such as Intensive Care, Disablement, and Death has its own set of procedure to follow. However, these steps are common to almost all the situations.

  • Notify Your Insurer as soon as possible
  • Obtain a claim form and give full details of the accident, and injuries/situation
  • Submit the form and other necessary documents like a police report, medical reports, medical bills, death certificate and postmortem report(if the accident was fatal) etc

Terms That You Should Know
Like I said before, you should make sure that you read and understand your policy form before embarking to sign and thereby committing yourself to a policy.

In all insurance product disclosure sheets, there is a section with “Key Terms That I Should Know” that contains all the important information about your policy in regards to payment and documentation. You will find details on terms such as:-

  • Importance Of Disclosure-A policyholder has a duty to disclose all the necessary information accurately and truthfully including updates to any new information e.g. job changes
  • Scale Of Benefits- This is the amount that will be paid by the insurer to the policyholder for certain types of claims such as the loss of a limb because of an accident.
  • Notice Of Claim- This is notice that is written to the insurer within seven days after getting a notice of or sustaining any accident, loss, or damage.
  • Cash before Cover- Means that the policy will only be effective after the premium due is paid.
  • Premium Warranty- The policy is canceled if the full premium is not paid within 60 days from the beginning date of the coverage.
  • Coverage Options- These are add-ons that enhance the Personal Accident Insurance coverage.
  • Couples- Refers to married couples with marriage certificates.

How to Apply for a Personal Accident Insurance Cover 
While it is not easy to select the right personal accident cover, it is something that has to be done with care. Most people in Malaysia opt for the face to face approach where they meet and talk with the insurance agent. This is an effective and personal approach but will require you to set aside time to book an appointment and meet the agent which may inconvenience some people.

You can also opt to go the digital way and apply online.

Insurance Service Malaysia No Claim Discount (ISM NCD) – Insurance Guides For YOU

Insurance Service Malaysia No Claim Discount (ISM NCD) MALAYSIA

What is NCD?
A No-Claim Discount also known as NCD is a reward scheme in form of a discount offered to car owners when they renew their car insurance if they have not made a claim on their policy for more than one year.

This simply means that every year you don’t make a claim against your car insurance policy; your discount is accumulated and you get more reduction from your premium.

It is a reward given to drivers for safe driving.

Insurance Service Malaysia (ISM) NCD
ISM insurance service Malaysia Berhad was formed by the General Insurance Association of Malaysia (PIAM) with an aim to establish databases which support standardized pricing. ISM came up with a central NCD database system where insurers and takaful operator can get information on NCD status. This also aimed to reduce the incidences of fraud and premium leakage.

Insurance Service Malaysia(ISM) has also made it possible for car owners to easily learn of their NCD entitlement through an online portal for free.

How much is NCD in Malaysia
The NCD rate you get is set and determined by Persatuan Insurans Am Malaysia(PIAM) which is the same in all the insurance companies in Malaysia. The discount varies depending on the type of vehicle in question. Private cars tend to get more discounts as compared to commercial vehicles and motorcycles.

Below is a table illustrating what your NCD entitlement is, depending on the type of car and number of years you have gone without making a claim.

Insurance Period Private Vehicle Commercial Vehicle Motorcycle
1st Year 25% 15% 15%
2nd Year 30% 20% 20%
3rd Year 38.3% 25% 25%
4th Year 45% 25% 25%
5th Year and More 55% 25% 25%

 

How Does NCD in Insurance Work?
You are only entitled to get this discount if you had stayed for at least a year without making a claim against your car policy. This means that if you are a new car owner and you are taking insurance for the first time, you will not get a discount and you will be required to pay the full premium amount. You will receive your first discount when you renew your policy a year later if you had not made a claim. In this case, you will receive a discount of 25% for a private car or 15% if you are renewing for a commercial vehicle or motorcycle. If by two years you have not yet made a claim, the discount further increases to 30% for private car and 20% for commercial car and motorcycle. The discount goes on increasing every year you go without making a claim of up to 55% for a private vehicle.

However, when an accident does happen and you have to make a claim, your NCD reverts back to 0% and you will be required to pay the full insurance amount when you renew your policy. You will start getting your discount again after you finish 12 months claim-free in which the discount start back at 25%.

How to Make a Claim
If you are involved in an accident, you have an option of making either an own damage claim or a third party claim if you have a Comprehensive cover policy:-

Own- Damage Claim
This entails making a claim on your comprehensive policy. You will, however, lose your NCD entitlement.

When you notify your insurer about an accident, you should also inquire for the names of approved workshops where you can take your vehicle for repairs. Make sure that you have completely filled the Motor Accident Report Form and submitted it to your insurer together with all the necessary documents i.e. original police report, the workshops estimated repair cost, copies of your insurance policy, your identity card and driving license.

The repairs to your vehicle will commence as soon as your insurance company approves your claim and you will be contacted by the workshop when your car is ready.

No-Fault Own Damage Claim
This is where an accident happens but the third party is the one at fault. You will be required to provide a police report and signed declaration letter (for a no-fault accident) to your insurer showing that you are not to blame for the accident. Then you can be able to make an ‘Own Damage Knock-for-Knock’ claim in which case your NCD entitlement will not change.

Certain insurance companies may have their own procedure that you will be required to follow so it is advisable to stay informed on new policy updates.

Third Party Claim
If an accident happens and you are not at fault, you can opt to make a third party claim and retain your NCD privilege.

Third party claim can be done in two ways. You can either submit the claim to the insurance company of the party to blame or you can submit the claim to your own insurance company (if you have a comprehensive cover). Submitting to your insurance company is encouraged because the claims are processed much faster.

Important Factors to Know about No-Claim Discount (NCD)
No-Fault Damage
This is where an accident happens that is not your fault and you make a claim against your comprehensive policy. Your claim will be processed and you will still retain your NCD.

Windscreen coverage
Windscreens are quite expensive to replace, that’s why some people opt to have windscreen cover as an add-on to their motor policy. If you have a windscreen cover, your insurer will pay for any replacement or repairs without you losing your NCD.

However, if you don’t have a windscreen cover and you make a claim, your NCD will be lost. It is, therefore, very important to carefully consider and understand what works best for you.

There are times when it is better to pay for the repair yourself rather than making a claim and losing your NCD.

NCD is transferable
NCD applies to the policy owner and not the vehicle. This means that if you had an NCD of 45% and you decide to sell your current car and get a new one, you can very easily transfer your NCD of 45% to the new car.

However, NCD cannot be used in more than one car, so if you are buying a new car and keeping the old one, the new car NCD will start from zero. We recommend that if you have two or more cars, you should place the higher NCD for your most expensive car so as to save more on premiums.

Also note that if you sell your current car and don’t transfer your NCD to your new car for one reason or the other, your NCD starts dropping every year until it reaches 0%.

The NCD is tied to your name; therefore, it cannot be transferred to another person.

Changing Insurers
If you decide your insurer, you will still retain the NCD that you had accumulated. This is because NCD is not something that is set by individual insurance companies. It is regulated and applies to all motor insurance companies in Malaysia.

Where to Check Your ISM NCD Status
You will learn about your NCD entitlement when you renew your car insurance from your insurer.

You can also check your NCD status online through this ISM supported link: https://www.mycarinfo.com.my/ncdcheck/online. You will only be required to provide your vehicle registration number and your identification number.

You should also note that if for any reason your NCD entitlement has been canceled or you note some discrepancies with the amount, you should contact your insurer or takaful operator for clarification.

Conclusion
Motor Insurance is compulsory in Malaysia and can be a bit costly. A No-Claim Discount (NCD) is a great way of cutting down on some premium for up to 55%. It also promotes safe driving and encourages car owners to be a little more informed on car insurance. You start getting NCD after you have gone for at least 12 months without making a claim. The discount starts at 25% up to 55% for private cars.

The NCD is also transferable since it is attached to the name of the car owner. You can opt to transfer from one car to the other but you are not allowed to use it in more than one car. You are also able to retain the NCD even if you move to another insurer. If you don’t know what your NCD status is, you can easily find out through the ISM online portal for free.

Understanding your policy is very important. It can protect your right as a consumer and also save you from unnecessary costs. Make use of your insurers’ customer support line and always ask for elaboration of things you don’t understand in your policy.