Car Insurance: Third Party Policy Explained

Having valid motor insurance is a legal requirement before a vehicle can be used on Malaysian roads.

There are different types of motor insurance, and each provides a different level of protection. One of the most basic options is third-party car insurance.

So, what does third-party insurance cover? Is it enough for your car? And what happens if another driver causes an accident?

Let’s take a closer look.

What Is Third-Party Car Insurance?

Third-party insurance provides protection against your legal liability to other people when you use your vehicle.

This can include liability for:

• Death or bodily injury to a third party
• Damage to a third party’s property

However, third-party insurance generally does not cover damage to your own car under your own policy.

This means you may have to pay for repairs to your own vehicle yourself if you cause an accident.

Types of Car Insurance in Malaysia

There are several types of motor insurance recognised in Malaysia.

The three common levels of cover are:

1. Third-party insurance
2. Third-party, fire and theft (TPFT)
3. Comprehensive insurance

You can learn more about the different types of car insurance coverage.

Third-party insurance

This is the basic level of cover. It mainly protects you against your legal liability to third parties.

It does not cover accidental damage to your own vehicle.

Third-party, fire and theft (TPFT)

TPFT provides third-party liability protection and also covers your vehicle against certain losses caused by fire or theft, subject to the policy terms.

However, it does not generally cover accidental damage to your own vehicle caused by a collision.

Comprehensive insurance

Comprehensive insurance provides broader protection.

Besides third-party liability, it can cover accidental damage to your own vehicle, as well as loss or damage caused by fire or theft, subject to the policy terms.

Additional protection may also be available depending on the insurer and policy.

What Does Third-Party Insurance Cover?

Third-party insurance is mainly designed to protect you from financial liability to other parties.

For example, if you accidentally hit another car and damage it, the third party may make a claim against your insurance for the covered loss.

However, your own vehicle is generally not covered under your third-party policy.

That is the main difference between third-party and comprehensive insurance.

Can You Claim For Your Own Car With Third-Party Insurance?

Generally, no.

If you cause an accident and your own car is damaged, your third-party policy does not normally pay for your own vehicle repairs.

You would have to pay for the repairs yourself unless another applicable source of compensation is available.

What If Another Driver Hits Your Car?

This is an important point.

If another driver causes an accident and damages your car, you may be able to claim against the at-fault driver’s insurer, subject to the circumstances and claim requirements.

Having third-party insurance does not mean you automatically lose your right to seek compensation from the party responsible for the accident.

If you have comprehensive insurance and meet the relevant conditions, an Own Damage Knock-for-Knock (OD-KFK) claim may also be available in certain cases.

Who Should Consider Third-Party Insurance?

Third-party insurance can be an option for vehicle owners who mainly want the basic level of motor insurance protection required for road use.

However, the right type of cover depends on your vehicle, financial situation, risk and the products available from insurers.

Do not assume that a particular vehicle age automatically means you must buy third-party insurance.

There is no universal rule that cars above or below a certain age must have a particular type of insurance. Insurer eligibility and product terms can differ.

If you own an older vehicle, check what coverage is available from your preferred insurer before making a decision.

Can You Add Extra Coverage To Third-Party Insurance?

The availability of add-ons depends on the insurer and the specific product.

Not every additional benefit available under comprehensive insurance will be available under a third-party policy.

If you need extra protection for your own vehicle, compare the available products and check the policy terms carefully.

Is Third-Party Insurance Cheaper?

Third-party insurance is generally a more basic form of cover, so its premium can be lower than a comparable comprehensive policy.

However, you should not compare insurance based on price alone.

A cheaper policy may provide less protection for your own vehicle.

Before choosing a policy, consider:

• What is covered
• What is not covered
• Policy exclusions
• Excess
• Available add-ons
• Your vehicle’s current value
• The financial impact if your own car is damaged

You can also read more about how car insurance premiums are calculated.

Third-Party vs Comprehensive Insurance

Coverage	Third Party	Comprehensive
Third-party bodily injury/death liability	✓	✓
Third-party property damage liability	✓	✓
Own vehicle accidental damage	✗	✓
Own vehicle fire	✗	✓, subject to policy
Own vehicle theft	✗	✓, subject to policy
Optional add-ons	Depends on product	More options may be available

The exact coverage always depends on the policy wording and terms.

Which Insurance Should You Choose?

There is no single policy that is suitable for every driver.

Third-party insurance may be suitable if you mainly need basic liability protection and are prepared to bear the cost of repairing your own vehicle.

If you want protection for your own car against accidental damage, fire or theft, a comprehensive policy may provide broader coverage.

Before making a decision, compare the coverage and cost based on your own needs.

What If You Need To Renew Insurance For An Older Car?

An older vehicle may still have different insurance options depending on the insurer.

Do not rely on outdated rules that say a car must switch to third-party insurance after a certain number of years.

Instead, check the current eligibility and terms offered by insurers when you renew.

If the vehicle has been inactive for a long time or the owner has changed, you may also need to follow additional procedures before renewing its roadtax. For example, see this guide on how to renew roadtax if the car owner is deceased.

What If You Are Buying A Used Car?

If you are buying a used vehicle, insurance is only one part of the process.

You should also make sure the vehicle is properly inspected and that any required inspection procedures are completed.

You can learn more about PUSPAKOM vehicle inspections before completing your purchase.

Final Thoughts

Third-party insurance provides basic protection against your legal liability to other parties. However, it generally does not cover accidental damage to your own car.

If you want broader protection for your vehicle, comprehensive insurance may be a better option, depending on your needs and the policy available to you.

Before renewing your car insurance, compare the premium, coverage, excess, exclusions and available add-ons instead of looking at price alone.