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

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.

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.

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.

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