A Brief Introduction to Car Insurance
For many of us, the car is our primary means of transport unless we own a motorcycle or have access to a more reliable mode of public transportation such as Kuala Lumpur’s LRTs. It’s also an expensive asset to acquire, ranking just below real estate and maybe your education, depending on where and what you studied. It’s basically a really expensive thing that you wouldn’t want to lose to an unfortunate accident. But how well do you know the types of car insurance in Malaysia, and do you know which one you’ve got?
Third Party Cover
This is the most basic type of car insurance available in Malaysia. This means that it’s compulsory for you to buy at least third party cover under Section 90(1) of the Road Traffic Ordinance Act 1987. The ‘third party’ referred to by the cover actually means the victim of your little accident, should it happen. Unfortunately, while third party insurance covers claims for bodily harm and loss or damage to the third party’s vehicle, this courtesy isn’t extended to you. This means that your insurance covers your victims while your own bank account covers yours.
Third Party, Fire and Theft Cover
This insurance is a step up from the basic third party cover in the sense that it provides you added coverage for your vehicle for damage by fire or loss by theft. It’s more expensive than plain old third party insurance, of course, but you’ll be covered if your car crashes and burns. It’s better than not being able to recover anything from your lost asset, right? Keep in mind that the third party portion of this insurance is typically higher (or even unlimited) than your fire and theft cover, so the value you can recover from your burned or stolen car may not cover its full value.
This insurance offers you the best of both worlds as it protects both you and the third party involved. Both of you are eligible to claim from this insurance in the event of a collision. Out of all three types of motor insurance, only this one properly covers your own vehicle. Due to the wider coverage, comprehensive covers are usually offered to owners whose cars are still ‘young’, when vehicle break-downs and accidents caused by faulty vehicle parts are statistically less common. But that’s not all. Besides qualifying for the privilege of being able to purchase a comprehensive cover in the first place, you’ll also have to cough up a heftier sum for it. There are two typical ways your claim will be compensated to you: you’ll either be paid based on the market value of your vehicle when it was damaged (not the time you purchased the insurance) or a pre-agreed sum based on your agreement, whichever is lower.
As this is a car insurance, it protects and covers your car – but not you or your passengers, or any modified parts. Don’t make the mistake of resting on your laurels even if you purchased a comprehensive cover, because you’ll still have to pay for your own injuries in the event of an accident – and your passengers can also sue you to pay for their accident-inflicted injuries unless you were extra paranoid and purchased a Passenger Liability Extension cover when you bought your motor insurance.