Special perils coverage, often included in comprehensive insurance policies, is designed to protect against specific risks or perils not typically covered by standard insurance policies. This add-on coverage for motor vehicles varies across insurance companies. Some offer benefits that others don’t and charge a higher premium to cover losses.
Therefore, getting the best coverage requires careful consideration of several factors to ensure optimal protection during unforeseen circumstances. Here are the six factors you should consider before purchasing a special perils add-on from your insurance company.
Location
Your geographic location plays a significant role in determining the need for specific special perils coverage. For instance, if you live in an area where extreme weather is common, you might want to consider special perils add-ons that offer coverage for related risks.
Do note that flood coverage is becoming increasingly common as many areas are prone to flash floods yearly. Likewise, those who reside on hilly sides may experience landslides. If this is the case, coverage for these perils should be prioritised.
Budget
Although special perils only cost 0.2 to 0.5% of the sum insured, they can certainly increase the cost of your insurance premiums. Therefore, you should strike a balance between comprehensive coverage and affordability. If you have a budget for vehicle insurance, choose perils coverage from brands that offer lower premiums for as little as RM50, like Allianz, Zurich, MSIG and Tokio Marine.
Some brands like Zurich also provide a discount of 60% off the tariff rate for special perils, enabling you to save on your contribution.
Policy Exclusions
When selecting add-ons for natural disasters, always review the terms and conditions to understand the exclusions or limitations of the policy. Most policies have exclusions and restrictions on coverage for special perils that are often mentioned in the policy wording document.
As such, your insurer may deny a damage claim from events that the company does not cover under specific circumstances. For this reason, always read and understand the fine print of your car policy to avoid unexpected rejections later.
Insurer Reputation
Considering an insurer’s reputation is crucial to purchasing any insurance policy. Choose a reputable insurance company with a strong customer service and claims processing track record. The best way to do this is to read customer reviews and seek recommendations from others.
Besides, evaluate the insurer’s claims process, such as the complexity of the process, documents required, average processing time, approval timeframe, etc., to decide if the brand is worth investing in.
Customisation
When considering an insurer’s reputation, be sure to also check for policy customisation. Look for insurers that allow you to customise your coverage to suit your specific needs. For instance, you may be looking for a limited special perils add-on that meets your budget.
However, your current insurer only provides a full special perils add-on, which costs more than you can afford. In this case, you may have to look elsewhere to get the required protection.
Deductibles and Coverage Limits
It’s normal for insurance providers to set a deductible (the amount you pay before insurance coverage kicks in) on perils claims and maximum coverage limits for damage arising from natural disasters. For example, your insurer may permit a claim for flood damage only once per policy period and require an upfront payment before they can make up for the loss or damage.
Under such circumstances, subsequent occurrences may not be covered as they exceeded the coverage limit. Therefore, you should ensure your policy aligns with your financial situation and doesn’t require too much out-of-pocket expenses.
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