The Basics
Motor Takaful, or car insurance in general, functions to protect you from damages or losses incurred on a third party involving your vehicle. Specifically, a third party’s death, bodily injuries and property damages would be covered by your policy, and not you.
There are two types of policies that motor Takaful offers:
- Third Party
The minimal, most basic policy as required under the Road Transport Act 1987. This protects you against a third party’s death, bodily injury and/or property damage, but not that of your own.
- Comprehensive
In addition to third party damages, a comprehensive policy would extend to cover your vehicle in accidental fire, theft or accident events.
The Savings
As an incentive for being claim-free, car owners, under motor Takaful, can enjoy discounts if no claims are made during the cover period, increasing on the year. Additionally, No-Claim Discount scores are transferable when you trade up your vehicle! One thing to note is that if you make a claim on an accident that stems from your own fault, the NCD is reset to 0%, requiring you rebuild your score.
Source: http://www.malaysiantakaful.com.my/Library/Consumer-Education-Series/News/Motor-Takaful.aspx
The Bonuses*
In addition to the savings above, being no claim made when your motor Takaful policy expires entitled you to a share in the surplus of the Takaful fund. The surplus is shared between you, the participants, and the Takaful Operator under the concept of surplus-sharing based on a pre-defined ratio, which would be stated in your Takaful certificate. This surplus sharing is depending on the financial performance of the Takaful fund. The calculation is as follows, based on a hypothetical RM4 million fund surplus with contribution by you of RM1,000.
Surplus sharing ratio = Pre-agreed Sharing Ratio of 50% x Surplus of RM4 million
-----------------
General Contribution of RM10 million
= 20%
Surplus attributable to you = Surplus sharing ratio x RM1,000 (your contribution)
= RM200
This is just an illustration to show how the surplus sharing works for participants who have no claim during the cover period. Please take note that different Takaful operators may have different calculation methods.
*Rebate, Mudharabah, Hibah are common terms used by Takaful operators to explain about surplus sharing.
A Win-Win Situation
Since Takaful works on the basis of mutual assistance and donation, any surplus of RM10 or less, if left untouched by the participant, goes towards charitable causes. Just recently, a considerable collective sum from these monies went towards rebuilding homes and purchasing basic goods for the Kelantan flood victims. In other words, whether or not you choose to claim your surplus bonus, the money does not go towards someone’s pockets, but either translates into savings for you, or charity!
For more information on what Takaful can do for you please visit http://www.malaysiantakaful.com.my
