Some of you might not be familiar with some insurance terms as you slip through the pages of your policy. Be it when you want to purchase a policy plan or even renew a new one every year.
Such confusing insurance terms may include excess, betterment, waiver, endorsement, premium, etc. You may click the attached link to refer to our previous articles to learn about these terms.
In this article, we would like to share one more insurance term that we have yet to discuss. That would be – loading. Read on to learn more about this insurance term.
What is ‘loading’?
Loading is an additional surcharge imposed on the basic premium rate based on several risks.
Factors that may affect the risk where loading can be imposed are but are not limited to age of vehicle, the driver’s driving experience and adverse claims experience.
Loading comes into play when an insurer is dealing with a high-risk candidate and is resorted to by insurance companies in cases where the risk to the individual is higher than in ordinary circumstances.
How much does ‘loading’ cost?
Although the type of risk is similar, the fee rate or ‘percentage loading’ varies across insurers. The percentage ranges anywhere between 15% and 35%.
The higher the risk of an individual, the higher the percentage will be imposed.
Given scenario
Ahmad has an old car (brand XX) registered in 2007. Thus, making his car turns 15 years old this year.
In 15 years, Ahmad has never applied for an insurance claim – his NCD rate remains at 55%. However, despite Ahmad’s good record, his insurer still has to charge a percentage loading to his basic insurance premium at 30%. The reason being is the car is quite old.
Therefore, the premium that Ahmad has to pay for 2022 is as followed:
Calculation before deduction of NCD, and loading charges:
| Basic premium | RM427.30 |
| Percentage loading (30%) | RM128.19 |
| Amount due | RM555.49 |
After NCD deduction
RM555.49 – NCD (55%) RM305.50= RM249.97
Total premium payable after adding SST tax (6%) and stamp duty charges
RM249.97 + RM15 (SST) + RM10 (duti setem) = RM274.97
For the insurance renewal in 2022, the total insurance premium to be paid by Ahmad is RM274.97.
Compare loading charged before renewing insurance
Briefly, the higher the percentage loading charged, the more expensive the insurance premium to be paid.
Therefore, we recommend you compare first the percentage loading across insurance providers. The comparison can help you get the cheapest offer in town. The lower the percentage loading, the lower the insurance premium you will have to pay.
Please note that some insurer does not impose any charge. Hence, it is essential to do research first before purchasing your car’s insurance coverage.
Bjak is one of Malaysia’s largest car insurance comparison sites. Get free quotes at Bjak and renew car insurance and road tax online in just 5 minutes.
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