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Car Insurance 101: Things You Need to Know

Key Points

  1. What is car insurance?
  2. Types of car insurance
  3. Types of coverage by car insurance
  4. Additional coverage for maximum protection
  5. Reasons to buy a car insurance
  6. How to buy car insurance?
  7. Where can you buy car insurance?
  8. How to choose the best insurer?
  9. How much do you have to pay for your premium?
  10. Factors that affect your premium
  11. Tips to save on car insurance
  12. Where can you renew car insurance?
  13. Car insurance claims process
  14. List of car insurance providers
  15. Common terms for car insurance

Car insurance is a necessary evil for car owners. It is not the most favourite thing to do with our hard-earned money, but we know that the protection of our cars and those inside them deserves complete commitment from us as drivers. We will get you covered with a thorough understanding of car insurance so that when the time comes for policy purchase or renewal, there will not be any surprises. It might seem like an overwhelming process, but we are here to help make things simple for you.

What is car insurance?

Car insurance is just what it sounds like – insurance for your car. It is a contract between you and an insurance company. You agree to pay the premium, and the insurance company agrees to pay your losses as defined in your policy terms. Car insurance provides property, liability, and medical coverage for you, your passengers, and the third party involved. There are different types of car insurance, and the coverage you choose will depend on your needs. When shopping for car insurance, compare quotes from multiple insurers to find the best fit for you.

Types of car insurance

There are 3 types of car insurance in Malaysia. Confused about which one to choose? We will break them down for you to understand them easily and help you make an informed decision.

Coverage Types of car insurance
Comprehensive Third-party, fire, and theft Third-party
Bodily injury to third-party
Yes
Yes
Yes
Theft, attempted theft, and fire
Yes
Yes
Damage to third-party’s property
Yes
Yes
Yes
Damage to your car due to accident
Yes

Types of coverage by car insurance

  • Property coverage
  • Pays for the damage to or theft of the car

  • Liability coverage
  • Pays for legal responsibility to others for bodily injury or property damage

  • Medical coverage
  • Pays for medical bills, rehabilitation, funeral expenses, and *lost wages

*Depending on your car insurance policy.

Additional coverage for maximum protection

Insurers offer other additional coverage (or add-ons), but you must pay an additional amount to your premium. Some of the add-ons include:

  • Coverage for natural disasters (special perils)
  • Coverage for a strike, riot, and civil commotion (SRCC)
  • Coverage for windscreen (damage)
  • Coverage for child car seat (damage and theft)
  • Coverage for smart key (damage and theft)
  • Coverage for car accessories
  • Coverage for betterment (new spare parts and repaint)
  • Coverage for the Legal Liability to and of Passengers (LLTP)
  • Coverage for the Legal Liability of a Passenger (LLOP)
  • Cash rebate for driving less
  • Compensation for Loss of Use (CLU)
  • Compensation for Assessed Repair Time (CART)

Please note that different insurer offers different add-ons. You can refer to this page for more information.

Reasons to buy a car insurance

You might be wondering if you need car insurance. Well, the answer is YES! We will show you how getting car insurance can benefit your life in more than one!

  • Driving without car insurance is against the law
  • Did you know the Road Transport Act 1987 states that drivers who do not have car insurance coverage can be prosecuted under Section 90(2)? A conviction will mean a fine of up to RM1,000 and license suspension for 12 months.

  • Requirement for car loan application
  • Are you thinking of applying for a car loan to buy your dream car? If yes, then add ‘car insurance’ to your cart! Every bank in Malaysia requires you to purchase car insurance/ Takaful when applying for a car loan. The reason behind this is that the bank is the lienholder (someone who has a legal right to your car until you pay off your loan). They want to protect their investment while it is being operated by someone else since they are responsible for fixing anything damaged within its limits. Different banks also require you to purchase different types of car insurance, so be sure to be informed before applying.

    You can read more about car loans here.

  • Protects against high medical bills
  • As stated before, not having car insurance is breaking the law. But what is even worse than breaking the law? The thought of having an unfortunate accident with no coverage to protect yourself or others because someone else was uninsured! Car insurance is essential for many reasons, but one of the most important is that it helps pay for medical bills.

    If you are involved in a car accident, your first instinct may be to seek out the other driver’s insurance company to cover your medical bills. However, if you are involved in an accident and the other driver does not have car insurance, you could be stuck with a substantial medical bill. But with car insurance, your policy will step in and help cover the cost of your medical bills. Additionally, if you are found to be at fault for the accident, your car insurance will also help pay for the other driver’s medical bills.

    So, even if you are a careful driver, it is still worth getting car insurance. It could save you much money in the long run as car accidents can happen to anyone, so it is better to be prepared.

  • Good investment for your car
  • Car insurance can protect your vehicle from damage caused by an accident or a different covered peril, like falling objects, fire, and theft. Some insurers also provide additional coverage for natural disasters and riots. Repairing your car after an accident will cost your arms and legs, and car insurance will help you spare them! There are many affordable car insurance plans on the market – so do not worry; you do not have to be a millionaire to afford it. Paying your premium monthly (or annually) will cost less than paying for the repair at car workshops.

    In addition, if you have children or share your car with other people, car insurance is a good idea. You might be surprised to learn that your car insurance policy also covers anyone who drives or will soon drive the same vehicle (also known as authorised drivers). If one person gets involved in a car accident while borrowing your car, you do not have to worry about being out of pocket for damages! A good investment, right?

  • It makes your life easier post-car accident
  • The experience of dealing with insurance can be frustrating for many people, but it simplifies everything after an accident. Without insurance, your only option would be dealing directly with the other person involved or whose property was damaged by this incident – something most of us do not enjoy doing! If you are insured by a reputable company that will deal with all these things for you, you will thank yourself.

How to buy car insurance?

  1. Make research on car insurance and understand all your options
  2. Decide on which type of car insurance you need
  3. Choose a few insurers and get quotes from them
  4. Compare the quotes and coverage
  5. Decide on the insurer
  6. Pay your premium

You can also buy from us. Click here, fill in your information, and we will do everything for you.

Where can you buy car insurance?

You can buy your car insurance through an agent or the insurer’s website.

But… What if there is an easier way? With PolicyStreet, we will make your life easy. Whether you are looking for the perfect car insurance policy or just want to compare prices, we can help! We offer FREE quotes that will fit your needs in 3 easy steps in 60 seconds.

How to choose the best insurer?

Choosing the best car insurance is a big decision as most of us use a car to travel. Here are some things to look out for when choosing the best insurer for you.

  • Reputation
  • We are used to hearing “do not believe everything you hear from other people”, but in this case, you should! It is always good to get reviews from people who have some experience with your preferred insurer, so this is a bonus. Finding a reputable company is crucial as the fate of our car depends on it, so dig as much as you can from other people or your research!

  • Claims process
  • It is essential to read about the claims process before buying car insurance. Be aware of how long it takes to process your claims or incident report and what payment structures each provider offers – cashless or reimbursement-based. The claims process is an essential part of ensuring your peace of mind. You want an insurer that will provide you with the smoothest experience possible so that there is no need to worry about anything else!

  • Coverage
  • When shopping for car insurance, it is vital to choose an insurer that provides appropriate coverage that fits your needs. The right policy will protect you in case of damage or theft. Read and compare car insurance coverage offered by different insurers.

  • Premium price
  • You want an insurer with a low price AND an excellent service because those are the things we cannot live without! But it is worth noting that a low price may not always mean good service – and going by what seems like an affordable rate could be a costly mistake. You should get the best deal possible without sacrificing your car’s protection – which means you should take extra precautions while driving so as not to drill holes in your pockets too deeply.

Insurance companies are not all created equally, so do some research on who can give you the best coverage and customer service experience before buying car insurance!

How much do you have to pay for your premium?

Car insurance premium depends on various reasons. Generally, most car insurance premium starts from RM1,000. For more information, contact your preferred insurer or check with us!

Besides your premium, there are other charges such as stamp duty, SST, and add-ons (if any).

Factors that affect your premium

The premium you pay for your car insurance can vary depending on the reasons. The following list includes some common ones, but there is always more to it than just that!

  • Type of car insurance
  • Your car’s market value
  • Your car’s age
  • Your location
  • Your driving record
  • Your occupation
  • No-Claim Discount

Tips to save on car insurance

Car insurance can be expensive, but it is not as bad when you know ways to save on your car insurance. Look no further than these clever tricks!

  • Get only what you need
  • Firstly, there are different types of car insurance, and each one comes at its own price, so make sure that the type is right for your needs! If comprehensive coverage is not essential for you, consider buying third-party coverage, as it will still cover damage to third-party property or third-party’s bodily injury.

    Next, while add-ons are really tempting to buy to maximise your car’s protection, it is unnecessary. You can save much money if you only take what you really need.

  • Compare, compare, and compare!
  • If you are due for renewal and the annual premium has gone up notably, consider shopping around to see if there are lower rates available. One of the most incredible tricks? Get quotes from other insurers before choosing one! Comparing policies from multiple insurers help you to get the best car insurance that will suit your needs and budget. It is always great to have options before making a big decision.

  • Multi-car discounts
  • You might be surprised by how much more you will have to pay for car insurance if you insure a single vehicle instead of several. This is because the bulk rate offered by many insurers essentially functions as an incentive; they want your business and will offer deals to get new customers on board and increase their total number of cars covered by this strategy!

  • Low mileage discounts
  • Some insurers offer low mileage discounts or pay-as-you-drive policies. The less you drive, the cheaper your car insurance is. You can consider taking advantage of this feature if you do not like to drive and prefer staying at home all day since it could add up savings over a lifetime with regular use.

  • Consider increasing your deductibles
  • There are typically two critical features to consider when shopping for car insurance: deductibles and premiums. A deductible is the amount of money that has been paid before your coverage kicks in should any accidents happen with or without damage done. Deductibles can often lead to lower rates, but they can also mean higher out-of-pocket expenses should something go wrong.

  • Be a careful driver
  • This is a no-brainer trick, but it works! This should go without saying, but people tend to become careless in today’s age of increasing car distractions and mobile phone use while driving (a trend that seems to continue). When you are a reckless driver, your insurance rates will increase.

Where can you renew car insurance?

Here are the channels that you can renew your car insurance:

  • MYEG (online or call +60378018888)
  • JPJ branch
  • Post office
  • Your insurer (branch office or online)
  • PolicyStreet (online)

Car insurance claims process

Claiming your car insurance is easy (it may vary between insurers). Below, we will list out ways to claim your car insurance in the simplest way:

  1. Collect as much evidence as possible (other driver’s details, pictures, videos, etc.)
  2. Notify your insurer as soon as possible
  3. Make a police report within 24 hours
  4. Complete the claim form
  5. Send your car to a panel workshop

Here are the documents that are required to claim your car insurance:

  • Copy of policyholder’s NRIC
  • Copy of driver’s NRIC (if the driver is not the policyholder)
  • Copy of car registration card
  • Original police report
  • Original police investigation result
  • Claim form
  • Adjuster report and repair cost bills
  • Medical bills and receipts/invoices (if there are any bodily injuries)
  • Evidence (pictures and/ or videos)

To know more about the process of claiming your car insurance, read this article.

List of car insurance providers

Common terms for car insurance

  • “Authorised driver”
  • A person you have permitted to use your car, and they are covered with the insurance policy that goes along with it.

  • “Betterment”
  • Cost associated with replacing old parts on your car when they are more than 5 years old.

  • “Compensation for Assessed Repair Time (CART)”
  • A type of compensation for when an insured’s car is being assessed for repair and cannot be used.

  • “Compensation for Loss of Use (CLU)”
  • A type of compensation for when an insured’s car is repaired after a crash and cannot be used.

  • “Coverage”
  • The risk and liability that insurers cover for an individual or entity.

  • “Deductible”
  • Also known as ‘excess’. It is the amount of money you, the policyholder, are responsible for paying before your insurance company pays out on a claim. This can be worth up to 10% of what is already covered.

  • “Legal Liability to and of Passengers (LLTP)”
  • A protection for you from the claims of your passenger if you caused an accident.

  • “Legal Liability of a Passenger (LLOP)”
  • A protection for you from the claims of others if your passenger causes an accident.

  • “Market value”
  • The car valuation that determines how much a vehicle is worth based on its condition, make and model.

  • “No-Claim Discount (NCD)”
  • Also known as ‘No-Claim Bonus (NCB)’. It is a type of discount if no claims were made during your coverage period.

  • “Premium”
  • A fixed amount that you pay monthly or annually to the insurer for coverage on your car.

  • “Special perils”
  • An insurance add-on that protects your car against loss or damage caused by natural disasters such as floods, storms, landslides, etc.

  • “Third-party”
  • A person or entity that is affected in an accident. They are not involved with the policy agreement, but they are interested in the outcome of the agreement.

Verdict

All in all, car insurance is mandatory for all car owners in Malaysia. However, it is not just a legal obligation – it is a form of protection. Applying for car insurance is a hassle-free process, and most insurers offer affordable rates depending on your needs. So do not wait any longer! We can help tailor a plan that meets your needs and budget. Understand all your options and find out which car insurance is the best fit for YOU here!

Related: Choosing the Best Car Insurance 101 | Car Insurer: Should I Stay or Switch?

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