Are you looking to buy car insurance? Before you purchase any, it is best that you first understand the different types of car insurance policies. This is to ensure that you obtain sufficient insurance coverage.
To begin with, there are three types of car insurance policies available in Malaysia. Let’s take a look at each type of policy and its coverage.
The first is comprehensive insurance, also known as first party insurance. This policy offers the most extensive coverage to policyholders.
Comprehensive insurance protects the policyholders’ cars in the event of a car accident, fire and theft. This policy also provides coverage to the third party.
Among the incidents covered by comprehensive insurance include:
- Accidental collision or overturning
- Collision or overturning caused by mechanical breakdown
- Collision or overturning because of natural wear and tear
- Damage caused by falling objects (subject to policy exclusions)
- Fire, explosion or lightning
- Breakage of windscreen, window or sunroof including lamination/tinting film
- Burglary, housebreaking or theft
- Malicious act
- Damage while in transit
Comprehensive insurance is usually mandatory for new cars aged 10 years and below. For cars above 15 years old, most insurance companies will recommend third party, fire and theft insurance (TPFT) coverage which we are going to explain next.
Third party, fire and theft insurance
Third party, fire and theft insurance protects the damage and loss to the third party where you are at fault. It also provides coverage to policyholders’ vehicles in the event of fire and theft. This policy does not cover the policyholders’ vehicles in other circumstances such as a car accident.
This insurance type is usually cheaper than comprehensive insurance and is more suitable for old and rarely-used vehicles.
Third party insurance
Third party insurance is the most basic policy. In Malaysia, it is mandatory for motor vehicle owners to own at least third party insurance to legally drive on Malaysian public roads.
“Third party” referred to in this policy is the individual involved in an accident with your car, where you are at fault.
This policy only gives coverage to the third party for the damage or loss to the third party and their property caused by your vehicle.
This policy provides very limited coverage as it can only be used for third-party claims. If your vehicle sustains any damage, you will have to bear the repair cost yourself.
For your ease of reference, below is a summary of the differences between the three types of car insurance policies:
How to choose the right insurance policy
To help you choose the right type of car insurance policy, below are three key aspects to consider.
It is important that you choose the right insurance based on your vehicle age. This is to avoid either over-insurance (insuring your car above the market value) or under-insurance (insuring your car below the market value).
For example, if your vehicle is old, say above 15 years old, you may want to buy third party, fire, and theft insurance. This is because the estimated damage cost for your vehicle may be cheaper and more affordable.
On the other hand, if your car is new, comprehensive insurance coverage is recommended as it can provide full coverage for your car.
If you frequently use your car, you are highly recommended to get comprehensive car insurance as it can provide more coverage.
For instance, for a car that is above 10 years old that is frequently used, comprehensive insurance is a better option as the policy includes coverage in the event of a car accident.
Sum of coverage
For vehicles that are above 10 years old but with a market value of more than RM10,000, you are highly encouraged to get comprehensive coverage to ensure that your vehicle is adequately covered. Comprehensive insurance can avoid owners from having to pay high costs for repairs when their cars run into an accident.
You can check your vehicle market value for free at MyCarInfo.
Choose the right insurance policy for your car
Most insurance companies provide the three types of insurance policies that we have covered above. Before you purchase any policy, consider the policy coverage, your vehicle age, car usage and the sum of coverage to ensure adequate protection.
To help you compare the policies offered by different insurers in Malaysia, simply use Bjak where you can get up to 15 car insurance quotes for free. Compare the quotations and easily renew your car insurance at Bjak, completely online.