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Things To Know Before Buying Car Insurance

    Things to know before buying car insurance

    As a car owner, you might have already heard that the Transport Ministry has extended the moratorium to renew road tax to 31 December 2021. But how about car insurance? You must still renew your insurance and keep it active at all times!

    Is your car insurance expiring? Before you renew it, here are things to know before buying car insurance. 

    Types of motor insurance

    In Malaysia, there are 3 types of motor insurance for you to choose which are (1) Comprehensive Insurance, (2) Third Party, Fire and Theft Insurance, and (3) Third Party Insurance. As you would most probably know, it’s mandatory for car owners to have at least Third Party Insurance. 

    The visual below gives you an overview of the coverage of the different types of motor insurance. Ensure that you choose the right insurance type for your car to enjoy sufficient coverage. Not sure which is suitable for your car? Read our article to understand the different types of car insurance.

    Types of motor insurance
    Types of motor insurance in Malaysia

    Should you renew your insurance before road tax?

    You must renew your insurance before you can renew your road tax.

    If you find it a hassle to leave your house just to renew your insurance and road tax, fret not. Now, almost everything – including insurance and road tax renewal – can simply be done online. In fact, your road tax can be delivered to your doorstep. Convenient, right?

    Road tax can only be renewed  after you renew your car insurance
    Road tax can only be renewed after you renew your insurance

    When should you renew car insurance?

    You can choose to renew your insurance anytime before its expiry date. But you’re highly encouraged to renew your insurance two months before its expiry date. 

    For instance, your insurance is expiring on 31 December 2021. You can renew it two months earlier that is on 31 October 2021. Don’t worry, the insurance will only take effect beginning 1 January 2022. So you won’t lose any money or miss your insurance renewal. 

    Can you change your car insurance company?

    Yes, you can change your insurance provider. Shop around and compare benefits including complimentary coverage as well as premiums offered by different insurers before buying car insurance. 

    What are the documents required for insurance?

    You can choose to renew your car insurance either online or offline. For online renewal, you simply need to key in your vehicle registration number and a few other particulars, and get quotations! You don’t need to submit any documents.

    If you choose to renew your insurance offline through any registered insurance agent, you may have to submit a few documents such as your existing insurance policy and vehicle ownership certificate (VOC).

    Sum insured: Is the agreed value or market value better?

    For your car’s sum insured, you can choose either the agreed value or the market value of your car. What is the difference between agreed value and market value?

    Agreed value is the amount agreed by the insurance provider and policyholder for the insured car based on the car model, year and other underwriting requirements. Meanwhile, market value is the current value of the car in the market.

    Say that you choose the agreed value, and your insurance will pay you the exact amount following the agreed value, in the event of theft or total loss. On the other hand, if you choose the market value, your insurance will only pay you an amount following the current market value of your car at the time of theft or total loss. Bear in mind that a vehicle’s market value depreciates about 10-15% every year. See our illustration below for a better picture:


    Market value: RM85,000

    Agreed value: RM85,000

    Imagine that you chose the market value of RM85,000 as the sum insured. As luck would have it, 11 months after renewing your insurance, you ran into a car accident that left your car broken beyond repair. Your insurance paid you only RM70,000 as your car’s market value has depreciated. Had you chosen the agreed value of also RM85,000, your insurance would have paid you RM85,000, even though your car’s market value has depreciated to RM70,000. 

    Should you choose the agreed value or market value?

    It actually depends on your car itself. Say that your car is brand new and has a high car loan, you may want to consider the agreed value. In the event of theft or total loss, you can at least use the payout to finance your car loan. Your car market value at the time of theft or loss will not affect the payout amount.

    But if your car is rather old (say, more than 15 years old) and debt-free, you may consider the market value as the sum insured. But keep in mind that you’ll get a lower payout according to the market value of your car at the time of theft or loss.

    What is your NCD rate?

    What is NCD? No Claim Discount (NCD) is a reward scheme for you if you make no claim on your insurance policy on an annual basis. For a private car, the scale of NCD ranges from 25% to 55%. You can earn NCD by not making any car insurance claims in a year. So keep your car claim-free to enjoy NCD and therefore a lower insurance premium. 

    How do you get NCD?

    You will automatically get NCD when you renew your car insurance. As mentioned, your car needs to be claim-free for 12 months in order for you to earn NCD. Keep in mind that you can lose your NCD if you make a car insurance claim. Imagine that you’ve earned 55% of NCD after not making any claim for 6 years.

    In your seventh year of driving, unfortunately, you meet with an accident and knock on somebody’s car, so you have to make an insurance claim. You will lose all your NCD and have to pay a higher premium the following year as your NCD is back to 0%. 

    However, if a third party causes the accident and you’re not at fault, you don’t have to worry as you’ll get to keep your NCD. For your reference, here are the NCD rates for private cars.

    NCD rates for private cars

    When should you renew the road tax?

    In normal times, you have to renew your road tax at most 7 days after your insurance renewal. You’re highly encouraged to renew your road tax as soon as you renew your insurance. That way, you only have to remember one date to renew both your insurance and road tax.

    Renew car insurance at Bjak

    It’s really important for you to be aware of the things about car insurance as we have shared, especially as you have to spend a considerable amount of money to renew your insurance every year.

    To help you save your precious money and time, we recommend you use Bjak to renew your car insurance. Why Bjak? You’ll get to compare up to 15 quotes, so you can secure the best car insurance at the best price! Moreover, Bjak can also help you renew your road tax and deliver it right to your doorstep.

    Get your car insurance quotes online at Bjak today.

    Bjak is one of Malaysia’s biggest insurance comparison websites, offering policies from over 10 brands. Get your free insurance quote from Bjak today!

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