Are You Considered Financially Safe on the Road?

Follow Loanstreet on Facebook & Instagram for the latest updates.

*The content and information on this article might be changed or updated periodically by Team Loanstreet without notice.

Did you know Malaysia has the 5th most dangerous road in the world? Just thought we'd open with that liner. Accidents happen almost as often as the common flu. Heck, there are even people who look out for accidents as their full-time jobs (more commonly found in the Klang Valley).

So what can you, a (hopefully) responsible and careful driver, do to protect yourself and your loved ones? Why, sign up for a good insurance plan so that you're not caught off-guard?

What's covered in this article?

What does your motor insurance cover in Malaysia?

The criteria for choosing the correct motor insurance should be similar to selecting your motor vehicle. It needs to fit your lifestyle and be within budget. Below are 3 types of insurance in Malaysia:

Insurance	Third-party	Third-party, fire and theft insurance	Comprehensive
Coverage	Minimum	Wider than “Third-party”	Wider than “Third-party, fire and theft insurance
What does it cover	Meet liabilities if injured or cause death to a third party	Coverage in "Third-party” Damage to third-party property Protection for loss of own vehicle due to fire or theft	Coverage in "Third-party, fire and theft insurance" Accidental damages to own vehicle can be repaired, reinstated, or replaced
Reception	Rarely purchased	Better than “Third-party”	Widely purchased
Remarks	Very Limited Coverage - Not worth it	Economical	More cost-effective to pay a bit more

With car insurance

The table above shows that most people buy “Comprehensive” type insurance. So, we will assume the insured has “Comprehensive” type insurance for the following example.

Your fault	Not your fault
Your insurance will cover the loss for both parties	You can make a NO-Fault Own Damage (ODN) claim for damages to your vehicle against your insurer instead of to the insurer of the other party’s vehicle and your Non-Claim Discount (NCD) will not be forfeited. Therefore, you will enjoy faster claims settlement services by dealing directly with your insurer

For your information, a Non-Claim Discount is a discount given to the policyholders upon motor insurance renewal if no claim is made or arises from the policy for continuous coverage of 12 months. The discount offered is based on a fixed rate provided by Persatuan Insurans Am Malaysia (PIAM) Motor Tariff.

Period of insurance	Private vehicle
After the first year of insurance	25%
After the second year of insurance	30%
After the third year of insurance	38%
After the fourth year of insurance	45%
After the five year of insurance	55%

[IMPORTANT] Do take note that when you are buying car insurance, make sure that you are not under-insured. In other words, you need to insure your vehicle based on the market value of your vehicle at the time of renewal or commencement of your motor policy. This value is also called the sum insured of your vehicle in your motor policy.

If you are underinsured, the average clause will be applied at the time of any loss or damage. You shall bear the difference and the rateable proportion of the loss when the market value of your vehicle at the time of loss exceeds the insured value by 10%.

Without insurance

Scenario	Salah korang	Bukan salah korang
1. Minor accident	If you are clearly at fault, it is advisable to resolve the matter on the spot. Filing a report at a police station will result in a minimum RM300 fine, plus other payments the other driver can claim as a result of the accident.	If the other party has car insurance, their insurance will cover your loss.
2. Major accident	You may not be able to reach an agreement on the spot. It's crucial to involve the police for a written report to protect your rights. The other driver may sue for damages, so you’ll need proof of what happened. If possible, contact an attorney to protect your rights and assets. Depending on the type of accident, a payment schedule might be negotiated through the other driver’s insurance company. As an uninsured driver, you may only be required to pay the deductible if the other driver’s policy covers the uninsured	Same as scenario 1

It is good to have insurance

Having said that, car insurance is not only important but compulsory in Malaysia. So make sure you always do your research before you purchase an insurance plan. Head on over to our handy car insurance page to get the latest quotes right at your fingertips!

*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.

ALSO READ:

About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!

SEE ALL ARTICLES