It is the responsibility of all car owners to ensure the renewal of insurance every year. That said, it is essential to have basic knowledge regarding insurance premiums such as the premium calculation.
In addition to how an insurance premium is calculated, you need to know the common additional charge that comes with it.
Read on as we will discuss the following charges.
Factors affecting the calculation of insurance premium
To your knowledge, Bank Negara Malaysia (BNM) has implemented the liberalisation of motor insurance tariffs for Motor Comprehensive and Motor Third Party, Fire and Theft products, effective 1 July 2017.
As a result of the liberalisation, the insurers and Takaful operators will be determining the premium rates for the products.
For instance, the followings are among the factors to decide the premium:
- Car market value
- Car’s manufacture year
- No Claim Discount (NCD)
- Type of car insurance
- Car location
- Driving record
Additional charges in basic car insurance premium
The followings are the additional charges in your basic car insurance premium:
Service and Sales Tax (SST)
The standard rate of SST charge of 6% will be applied to your basic insurance premium.
You will be charged with a stem duty of RM10 in insurance premiums before the final premium is generated.
You will be charged an additional charge or fee if you add any additional coverage to your insurance policy.
For example, additional windscreen coverage, special perils, etc.
In general, the charge and fees for each additional coverage will vary. The more additional coverage you purchase, the more expensive the insurance premium.
Commission (if you purchase with an agent)
You need to pay a certain amount for commission if you purchase with an agent.
It is a form of payment to an agent in which the agent receives a percentage of the value of each insurance/roadtax purchase. However, you are not subject to paying for commission if you do it online.
Calculation of insurance premium
Refer the following visual to understand the calculating basic formula of insurance premiums:
An example of calculating the insurance price for a Perodua Myvi with a cover amount of RM31,000
Renew online with Bjak
Are you still not clear on how to renew insurance yourself? Put your concern aside. You can do it conveniently using Bjak’s website. There is customer service will attend to provide you help from A to Z in case you need assistance.
Other than that, Bjak allows you to compare multiple insurers on a single platform. Thus, you can check better choices to choose the best plan at an affordable price.