If your car insurance company becomes insolvent in Malaysia, you do not automatically lose your policy protection. The Malaysia Deposit Insurance Corporation (PIDM) administers the Takaful and Insurance Benefits Protection System (TIPS), which protects eligible insurance benefits if an insurer member can no longer operate.
This means your eligible benefits may remain protected even if your insurer becomes bankrupt or has to close. However, the protection is subject to PIDM’s rules, limits and your policy terms.
What Happens If Your Car Insurance Company Goes Bust?
If an insurer becomes financially unviable or bankrupt and can no longer operate, PIDM will take action to ensure continuity of coverage under eligible insurance policies.
If the insurer has already closed and you have a valid claim, PIDM will pay the protected benefits according to the applicable conditions.
You do not need to purchase separate protection or register for TIPS. Eligible policyholders receive protection automatically.
What Is PIDM’s Takaful and Insurance Benefits Protection System (TIPS)?
TIPS is a protection system established by the Government and administered by PIDM. It protects eligible insurance and takaful benefits if an insurer member fails and cannot fulfil its obligations to policyholders.
In Malaysia, licensed insurance companies and takaful operators are automatically members of PIDM under the relevant financial services laws.
For your car insurance policy to qualify for TIPS protection, it must generally:
Be issued in Malaysia.
Be issued by a PIDM insurer member.
Be denominated in Malaysian Ringgit (RM).
You do not need to submit an application or pay an additional fee to receive this protection.
Check PIDM’s list of insurer members to understand which insurance companies and takaful operators participate in the system.
How Much of My Car Insurance Is Protected?
PIDM provides protection for eligible insurance benefits under TIPS, subject to the limits set for each type of benefit.
For motor insurance, the relevant protection includes:
Protected benefit
PIDM protection limit
Loss of or damage to your insured vehicle
RM500,000 per property
Loss of or damage to third-party property
RM500,000 per property
Death of a third party
RM500,000
Disability of a third party
RM500,000
Injury of a third party
RM500,000
Refund of prepaid premium for insurance required under the Road Transport Act 1987
100% of the amount prepaid
These are TIPS protection limits, not automatic payouts. Any claim remains subject to the terms, conditions and coverage limits of your original motor insurance policy.
For example, if you only have third-party insurance, TIPS does not turn it into comprehensive coverage. Your original policy determines which types of losses are covered.
Will My Car Insurance Coverage Continue If My Insurer Closes?
PIDM will take action to ensure continuity of coverage under eligible policies if an insurer member can no longer operate.
You should not assume that your policy is automatically cancelled just because your insurer faces financial difficulties. PIDM’s role includes protecting eligible policy benefits and taking steps to maintain coverage.
If your insurer has already closed and you need to make a claim, PIDM will arrange payment of protected benefits according to its procedures.
Follow official announcements from PIDM and check any instructions provided about your policy or claim.
What Should I Do If My Insurer Goes Bust?
If your insurer can no longer operate, follow official instructions from PIDM. In general, you should:
Check PIDM’s announcement: Confirm whether your insurer is affected and read the instructions provided.
Keep your policy documents: Save your policy schedule, certificate, payment receipts and any previous claim documents.
Check your coverage period: Confirm your policy’s expiry date and the benefits included.
Follow claim instructions: If you have an accident or an existing claim, follow PIDM’s instructions on how and when to submit the required documents.
Keep records of communication: Save relevant emails, letters and claim reference numbers.
If you are unsure about your policy status, contact PIDM through its official channels.
You can call PIDM at 1-800-88-1266, Monday to Friday, from 8.30 am to 5.30 pm.
What If I Already Made a Claim Before My Insurer Closed?
If you submitted a claim before your insurer closed, the claim may still qualify for protection under TIPS, depending on the policy benefits and applicable conditions.
PIDM will provide instructions on how claims should be handled after an insurer member fails. If the insurer has already closed, protected benefits will be paid by PIDM according to its procedures.
Keep your claim reference number, police report, repair documents, photographs and other supporting records. These may be needed when following up on your claim.
PIDM will notify policyholders of the applicable claim submission period through written communication and public announcements. Make sure you follow the stated deadline.
Does PIDM Protection Cover All Car Insurance Policies?
Not every insurance product or benefit is automatically protected. TIPS applies to eligible policies issued in Malaysia by PIDM insurer members and denominated in Ringgit Malaysia.
The protection also does not change the coverage you originally purchased.
For example:
A third-party policy remains third-party coverage.
A comprehensive policy remains subject to its original coverage, exclusions and excess.
Optional add-ons remain subject to the terms of the original policy.
Claims must meet the original policy conditions and PIDM’s protection requirements.
If you have questions about a particular benefit, check your policy wording and contact PIDM or your insurer.
Understand Your Car Insurance Protection
An insurer’s financial failure does not automatically mean you lose all your car insurance benefits. Through PIDM’s TIPS, eligible policyholders receive protection if an insurer member can no longer operate.
However, PIDM protection does not replace your original policy or provide coverage beyond its terms. Always understand your policy benefits, exclusions and limits before purchasing.
If you are comparing car insurance options, you can review quotes from 16 participating insurance and takaful providers through BJAK. Check the coverage and policy details before choosing a plan.
Will I lose my car insurance if my insurer goes bankrupt?
Not automatically. PIDM will take action to ensure continuity of coverage under eligible policies if an insurer member can no longer operate.
Do I need to register with PIDM for car insurance protection?
No. Eligible insurance policies receive TIPS protection automatically. You do not need to apply or pay an additional fee.
Does PIDM cover my car if my insurer closes down?
Eligible benefits for loss of or damage to insured property, including your vehicle, are protected up to RM500,000 per property under TIPS. Claims remain subject to your original policy terms and conditions.
Will PIDM pay my claim if my insurer has already closed?
Yes, PIDM will pay protected benefits if you have an eligible claim after the insurer member has closed, subject to its procedures and applicable policy conditions.
Does PIDM protection cover third-party claims?
Yes. Eligible third-party property damage and liability benefits, including death, disability and injury, are protected under TIPS up to the applicable limits.
Can I buy additional PIDM protection for my car insurance?
No. TIPS is a Government protection system administered by PIDM, not a commercial insurance product. Eligible protection is provided automatically.
Who should I contact if my insurer goes bust?
Check PIDM’s official website for announcements and instructions. You can also call its toll-free line at 1-800-88-1266 for assistance.
Nabil Farhan· · 5 min read
