{"id":60509,"date":"2026-07-08T15:49:00","date_gmt":"2026-07-08T07:49:00","guid":{"rendered":"https:\/\/bjak.my\/blog\/?p=60509"},"modified":"2026-07-08T15:49:03","modified_gmt":"2026-07-08T07:49:03","slug":"underinsurance-in-malaysia-the-average-clause-explained","status":"publish","type":"post","link":"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained","title":{"rendered":"<strong>Underinsurance in Malaysia \u2014 The Average Clause Explained<\/strong>"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_50 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Contents =<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\" role=\"button\"><label for=\"item-6a4e3f3ab0cbf\" aria-hidden=\"true\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999999;color:#999999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999999;color:#999999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-6a4e3f3ab0cbf\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#Introduction\" title=\"Introduction\">Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#How_the_Underinsurance_Average_Clause_Works_in_Malaysia\" title=\"How the Underinsurance Average Clause Works in Malaysia.\">How the Underinsurance Average Clause Works in Malaysia.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#How_the_Average_Clause_Works\" title=\"How the Average Clause Works\">How the Average Clause Works<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#A_Worked_Example\" title=\"A Worked Example\">A Worked Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#How_to_Avoid_the_Penalty\" title=\"How to Avoid the Penalty\">How to Avoid the Penalty<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#Summary_How_the_Average_Clause_Affects_Payout\" title=\"Summary: How the Average Clause Affects Payout\">Summary: How the Average Clause Affects Payout<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#Frequently_Asked_Questions\" title=\"Frequently Asked Questions\">Frequently Asked Questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#Related_Bjak_Guides\" title=\"Related Bjak Guides\">Related Bjak Guides<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#How_Bjak_Helps\" title=\"How Bjak Helps\">How Bjak Helps<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Underinsurance happens when your car insurance sum insured is lower than the car\u2019s actual market value. In Malaysia, the average clause means the insurer will pay claims proportionately, so you have to cover the remaining balance yourself.<\/p>\n\n\n\n<p>Understanding the average clause is the best defence. This guide breaks down how it works, with clear examples, and shows how to avoid the penalty.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How_the_Underinsurance_Average_Clause_Works_in_Malaysia\"><\/span><strong><strong>How the Underinsurance Average Clause Works in Malaysia<\/strong>.<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Underinsurance happens when your sum insured is lower than your car&#8217;s actual market value. In effect you only insure part of the car.<\/p>\n\n\n\n<p>It often happens innocently \u2014 a driver lowers the value to cut premium, or renews at an old figure while the car&#8217;s value has changed.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How_the_Average_Clause_Works\"><\/span><strong>How the Average Clause Works<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The average clause enforces underinsurance penalties through proportional reduction.<\/p>\n\n\n\n<p>The formula is payout = (sum insured \u00f7 actual market value) \u00d7 loss.<\/p>\n\n\n\n<p>Insure for 80% of true value and you receive roughly 80% of any claim \u2014 you cover the shortfall yourself.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"A_Worked_Example\"><\/span><strong>A Worked Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Say your car is worth RM50,000 but insured for RM40,000 \u2014 that is 80%.<\/p>\n\n\n\n<p>You have an accident with RM10,000 of repairs. The insurer pays 80% \u00d7 RM10,000 = RM8,000, and you pay the remaining RM2,000.<\/p>\n\n\n\n<p>The clause applies even to partial claims, which is why underinsurance hurts so often.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How_to_Avoid_the_Penalty\"><\/span><strong>How to Avoid the Penalty<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Avoiding the average clause is simple: insure for full, fair market value.<\/p>\n\n\n\n<p>Use a sum insured calculator for an accurate figure and review it at every renewal, because depreciation changes it each year.<\/p>\n\n\n\n<p>Never trim your sum insured just to lower premium \u2014 the saving is tiny next to the claim reduction you risk.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Summary_How_the_Average_Clause_Affects_Payout\"><\/span><strong>Summary: How the Average Clause Affects Payout<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th scope=\"col\">Insured vs Value<\/th><th scope=\"col\">Status<\/th><th scope=\"col\">Effect on Claim<\/th><\/tr><\/thead><tbody><tr><td>Insured at 100%<\/td><td>Full<\/td><td>Full claim payout<\/td><\/tr><tr><td>Insured at 80%<\/td><td>20% under-insured<\/td><td>Payout cut by 20%<\/td><\/tr><tr><td>Insured at 50%<\/td><td>50% under-insured<\/td><td>Payout cut by 50%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span><strong>Frequently Asked Questions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>How does this affect my car insurance renewal?<\/strong><\/p>\n\n\n\n<p>It directly shapes your cover and cost at renewal. Reviewing underinsurance average clause malaysia each year before you renew helps you avoid overpaying and keeps your protection accurate. A quick check on bjak.my makes it easy.<\/p>\n\n\n\n<p><strong>Does it affect my NCD?<\/strong><\/p>\n\n\n\n<p>Your No Claim Discount is earned through claim-free years. It is not lost overnight if your policy lapses \u2014 instead it steps down one level for each year without an active policy, and it only resets to 0% when you make an at-fault claim. Renewing on time keeps your full discount.<\/p>\n\n\n\n<p><strong>Where can I sort this out quickly?<\/strong><\/p>\n\n\n\n<p>On bjak.my you can compare quotes from 10+ insurers, set the right sum insured, and renew in minutes \u2014 all online, with free reminders so you never miss a renewal again.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Related_Bjak_Guides\"><\/span><strong>Related Bjak Guides<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For more context, read <a href=\"https:\/\/bjak.my\/blog\/car-insurance\/what-affects-your-car-insurance-premium\">what affects your car insurance premium<\/a> and <a href=\"https:\/\/bjak.my\/blog\/car-insurance\/car-insurance-premium-keeps-changing-why\">why car insurance premiums keep changing<\/a>, plus <a href=\"https:\/\/bjak.my\/blog\/car-insurance\/car-insurance-claim-approved-but-paid-less\">why claims can be approved but paid less<\/a>. These guides help you check renewal steps, NCD, premiums, claims or add-ons before choosing the right policy.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"How_Bjak_Helps\"><\/span><strong>How Bjak Helps<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Bjak makes all of this easier. Bjak&#8217;s sum insured calculator pulls your vehicle&#8217;s up-to-date market value automatically, so you can set the right insured amount in seconds instead of guessing. Everything happens online, so you can sort your insurance in one sitting without paperwork or phone calls.<\/p>\n\n\n\n<p>On bjak.my you compare quotes from 10+ insurers side by side in one place, so you see the best price and coverage without calling a single agent. Whether you&#8217;re renewing for the first time or switching insurers, bjak.my gives you the tools to do it confidently and at the best price.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Underinsurance and the average clause turn a small premium saving into a big claim loss. Insure for fair market value and review it yearly.<\/p>\n\n\n\n<p>Before your next renewal, compare quotes and renew in minutes on bjak.my \u2014 it&#8217;s the simplest way to stay covered, stay legal and get the best price.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<div class=\"wp-container-1 wp-block-buttons\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-nv-dark-bg-color has-text-color has-background\" style=\"background-color:#ffd103\">Get Your Free Quotation<\/a><\/div>\n<\/div>\n\n\n\n<p><br>Also Read: <br><a href=\"https:\/\/bjak.my\/blog\/car-insurance\/sum-insured-top-up-when-it-makes-sense\">Sum Insured Top-Up: When It Makes Sense<\/a><br><a href=\"https:\/\/bjak.my\/blog\/car-insurance\/honda-city-road-tax-and-insurance-price-in-malaysia-2026\">Honda City Road Tax and Insurance Price in Malaysia (2026)<\/a><br><a href=\"https:\/\/bjak.my\/blog\/car-insurance\/honda-civic-road-tax-and-insurance-price-in-malaysia-2026\">Honda Civic Road Tax and Insurance Price in Malaysia (2026)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ramai pemandu menetapkan sum insured terlalu rendah untuk jimat premium. Akibatnya, apabila berlaku kemalangan, average clause menyebabkan bayaran tuntutan dipotong secara berkadar.<\/p>\n","protected":false},"author":39,"featured_media":60525,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","spay_email":""},"categories":[431],"tags":[429,59,88],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v18.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Underinsurance in Malaysia \u2014 The Average Clause Explained | BJAK<\/title>\n<meta name=\"description\" content=\"BJAK | Car Insurance | Read about: Underinsurance in Malaysia \u2014 The Average Clause Explained Learn how underinsurance and the average clause affect car insurance payouts in Malaysia, plus how to avoid claim reductions.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Underinsurance in Malaysia \u2014 The Average Clause Explained | BJAK\" \/>\n<meta property=\"og:description\" content=\"BJAK | Car Insurance | Read about: &lt;strong&gt;Underinsurance in Malaysia \u2014 The Average Clause Explained&lt;\/strong&gt; Learn how underinsurance and the average clause affect car insurance payouts in Malaysia, plus how to avoid claim reductions.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/bjak.my\/blog\/car-insurance\/underinsurance-in-malaysia-the-average-clause-explained\" \/>\n<meta property=\"og:site_name\" content=\"BJAK\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/bjak.my\" \/>\n<meta property=\"article:published_time\" content=\"2026-07-08T07:49:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-08T07:49:03+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/i1.wp.com\/bjak.my\/blog\/wp-content\/uploads\/2026\/07\/Underinsurance-in-Malaysia-\u2014-The-Average-Clause-Explained.webp?fit=1080%2C683&amp;ssl=1\" \/>\n<meta name=\"twitter:creator\" content=\"@bjakmy\" \/>\n<meta name=\"twitter:site\" content=\"@bjakmy\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"BJAK Content Team\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Organization\",\"@id\":\"https:\/\/bjak.my\/blog\/#organization\",\"name\":\"Bjak\",\"url\":\"https:\/\/bjak.my\/blog\/\",\"sameAs\":[\"https:\/\/www.facebook.com\/bjak.my\",\"https:\/\/www.instagram.com\/bjak.my\",\"https:\/\/www.linkedin.com\/company\/14607755\/admin\/\",\"https:\/\/twitter.com\/bjakmy\"],\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/bjak.my\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/i1.wp.com\/bjak.my\/blog\/wp-content\/uploads\/2021\/09\/logo.png?fit=756%2C756&ssl=1\",\"contentUrl\":\"https:\/\/i1.wp.com\/bjak.my\/blog\/wp-content\/uploads\/2021\/09\/logo.png?fit=756%2C756&ssl=1\",\"width\":756,\"height\":756,\"caption\":\"Bjak\"},\"image\":{\"@id\":\"https:\/\/bjak.my\/blog\/#\/schema\/logo\/image\/\"}},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/bjak.my\/blog\/#website\",\"url\":\"https:\/\/bjak.my\/blog\/\",\"name\":\"BJAK\",\"description\":\"Renew your car and motor insurance at the lowest price! 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