Attention all car owners! Are you aware of the importance of having car insurance? It’s not just a legal requirement, but it’s also essential in protecting your finances in the event of an accident. But with so many types and factors that affect car insurance prices in Malaysia, how do you know which one is right for you? Don’t worry, we’ve got you covered! So, buckle up and get ready to learn everything you need to know!
What is Car Insurance?
Car insurance is a compulsory protection that vehicle owners must have. Besides that, the law requires you to have at least Third-Party Insurance to use the vehicle on the road. Car insurance plays an important role in bearing the expenditure that may come from various risks such as damage, theft, and fire. In addition, it provides financial protection against damage caused by accidents and injuries that may occur due to road accidents.
Importance of Car Insurance
Car insurance is vital for vehicle owners as it provides financial protection in case of any damages caused by accidents. If an accident occurs after the insurance has expired, the cost of repair will be the responsibility of the car owner, which can be expensive. Furthermore, car insurance protects against third-party claims for harm caused by the vehicle owner.
Types of Car Insurance in Malaysia
There are three types of car insurance available in Malaysia, varying from basic protection to comprehensive coverage. Each type of insurance provides different forms of protection, subject to differing terms and conditions depending on the respective insurance companies.
Third-Party Insurance
In Malaysia, it is mandatory for every motor vehicle to have at least the most basic coverage of Third -Party Insurance to be allowed on the road. This type of insurance provides coverage for damages caused by your vehicle to a third party’s vehicle or property in the event of an accident. The term “Third Party” in this context refers to the other car owner involved in the accident. Additionally, if you cause injury or death to a third party, this car insurance policy can protect you.
However, note that Third Party Insurance offers limited coverage as it cannot cover damages to your own vehicle and only applies to third-party claims. Therefore, the cost of Third-Party car insurance is usually lower than that of other insurance policies. It is important to carefully consider your needs and budget before selecting the appropriate insurance coverage.
Third Party, Fire and Theft Insurance
Similar to Third-Party Insurance, this policy also offers coverage against claims made by third parties due to accidents caused by your vehicle, such as injury, death, damage or loss to third-party property. Furthermore, this policy provides additional coverage for your vehicle in the event of damage caused by theft or fire.
Apart from the basic coverage mentioned earlier, you can also make a claim if your car has been vandalized or if there was an attempted break-in that resulted in damage to your car, such as a broken window or damaged car door. Similarly, if your car catches fire due to damage caused by an accident, this policy will also cover the cost of repair or replacement.
Comprehensive Insurance
The Comprehensive Insurance policy is an all-encompassing type of car insurance. It provides a broader range of coverage than Third Party Insurance and Third-Party Insurance, Fire and Theft. Comprehensive Insurance also includes coverage on the policyholder’s own vehicle as well. This means you’re covered for both third-party liability and loss/injury to your vehicle from an accident.
In Malaysia, car buyers who purchase through financial financing or car loans must have comprehensive car insurance. The reason for this is that comprehensive insurance policies offer more extensive coverage than other insurance types. In addition, it helps to minimize the potential high repair costs that may arise in the event of an accident.
Car Insurance Prices in Malaysia
The cost of car insurance can vary each year depending on the current market value of your vehicle. There are six primary factors that typically influence the price of car insurance:
Types of Insurance, Additional Coverage
The choice of vehicle insurance and the inclusion of additional coverage can also impact insurance prices. For instance, Comprehensive Insurance is usually available at a higher cost compared to Third Party Insurance.
No Claim Discount (NCD)
Vehicle owners who have not made any insurance claims by maintaining a claim-free record in the past 12 months can earn discounts ranging from 25-55% on their premium payable. This discount can help car owners reduce their insurance costs during the renewal process.
Current Market Value of the Car
The market value or rate of depreciation of the car can also influence the overall cost of car insurance. In general, the car insurance price is lower for cars with a lower market value.
Manufacturing Year
Car insurance premiums are also linked to the year of the car’s manufacture. Typically, insurance rates for a 2016 Proton Persona are lower compared to the premiums for a 2023 model of the same vehicle.
Location
Generally, car insurance premiums are higher in Peninsular Malaysia than in Sabah and Sarawak. This is due to the perceived higher risk analysis in Peninsular Malaysia, which has rough roads and terrains.
Engine Capacity
This means that higher engine capacity cars will have more expensive insurance prices. For instance, the insurance price for a Perodua Bezza with a 1.0 cc engine is generally lower than that of a Perodua Myvi with a 1.5 cc engine.
Whether you’re a new driver or a seasoned road warrior, always remember that car insurance is not just a formality but a necessary safeguard. We hope you now understand the types and factors that may affect car insurance prices in Malaysia. It can save you from hefty expenses and potential legal complications. Don’t let unexpected accidents and damages catch you off guard – invest in the right car insurance policy today.
Bjak is one of Malaysia’s biggest insurance comparison sites, with more than 10 insurance brands to choose from. Get your free insurance quote at Bjak today!
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