6 Things You Should Know Before You Renew Car Insurance in Malaysia [SPONSORED]

Are you looking to renew car insurance in the near future? If so, here are 5 things you should know before you do so. This article will cover:

• if you really need car insurance,
• the types of car insurance,
• which one you should get,
• how to get cheaper car insurance
• and more

#1 – First of all – Do you need car insurance in Malaysia?

Car owners probably know this, but it’s worth mentioning – as stated in the Road Transport Act 1987, car insurance is compulsory. You cannot use motorised vehicles without it.

In fact, you need to get your car insurance sorted out before you can even pay road tax, another compulsory requirement for car owners. 

Aside from that legal requirement, you also need car insurance in Malaysia for a more practical reason – it will help you financially in cases of unwanted circumstances.

In fact, you may even decide to renew car insurance just to add on coverage for flood (the technical term is special perils), after witnessing your fellow Malaysians struggle without it.

#2 – Which type of insurance is best for a car?

The best type of car insurance is Comprehensive cover, plus additional covers and benefits that fit your lifestyle and usage. This is the one you should get, if you can afford it, so you get coverage for others AND yourself. 

Comprehensive cover is one of the 3 main types of car insurance in Malaysia. The next section covers each type, sorted from least to most comprehensive.

#3 – Types of car insurance in Malaysia

There are 3 main types of car insurance in Malaysia, namely (1) Third party cover; (2) Third party, fire and theft cover; and (3) Comprehensive cover.

If you want to renew car insurance, you should know the differences between each of them so you make the best choice possible. The wording can get a bit technical, so I included the oversimplified version for easier understanding. 

(1) Third party cover

Price: $

Third party cover includes Act only cover PLUS indemnity* for liability in respect of damage to the third-party property if due to insured’s negligence or fault. This is the cheapest type of car insurance that you can purchase.

What Third party cover means, oversimplified version:

• If you knock into someone and caused injury or death, your insurer will compensate them
• If you knock into another vehicle and/or property and caused damage to their vehicle and/or property, your insurer will compensate them
• Important note: With Third party cover, your insurer will NOT compensate you

*Note: Indemnity is a technical word, but it more or less means giving you security or protection against a loss. Remember that the purpose of car insurance is not to make you rich, but to reduce your financial burden upon unexpected events. It’s meant to restore your assets to the previously agreed upon state, not give you the exact same car in brand new condition.  

(2) Third party, fire and theft cover

Price: $$

Third party, fire and theft cover includes Third party cover PLUS indemnifies the policy owner against theft or damage due to fire of the insured car.

What Third party, fire and theft cover means, oversimplified version:

• If you knock into someone and caused injury or death, your insurer will compensate them
• If you hit another vehicle and/or property and caused damage to their vehicle and/or property, your insurer will compensate them
• If your car is stolen or damaged due to fire, your insurer will compensate you

(3) Comprehensive cover

Price: $$$ to $$$$$ depending on additional coverage and benefits you add on. Obviously, the more coverage you have, the better.

Comprehensive cover includes Third party, fire and theft cover PLUS compensation for physical damage to the insured vehicle as a result of accidental collisions.

What Comprehensive cover means, oversimplified version:

• If you knock into someone and caused injury or death, your insurer will compensate them
• If you knock into another vehicle and/or property and caused damage to their vehicle and/or property, your insurer will compensate them
• If your car is stolen or damaged due to fire, your insurer will compensate you
• If you are driving and get into an accident and your car is damaged, your insurer will compensate you

You can make your Comprehensive cover even more comprehensive by purchasing add-on for additional coverage, such as:

• Windscreen coverage
• Passenger liability
• Medical expenses (as part of Personal Accident cover) due to road accident
• Coverage against damage to your car due to strikes, riot and civil commotion
• Coverage for damage to your car due to occurrence of natural calamities ← you want coverage for flood? You will want this one
• And more, depending on the insurer

#4 – You can get car insurance packages

However, which coverage should you take, and which ones can you do without? This is one of the most confusing parts when one renew car insurance.

Similar to health and medical insurance, the process of deciding which coverage you need and which you can do without is a hard process. Your may want ALL of the coverage, but your wallet disagrees.

In this case, you might want to (1) compare quotations and/or (2) look for other car insurance products that are designed specifically for their target audience in mind.

One great example is MSIG’s Lady Motor Plus Insurance, which is designed for women. Women don’t have to ‘guess’ which covers or benefits you need more than others, it’s already included. Here are the benefits:

How MSIG Lady Motor Plus works in real life

Listing the benefits alone doesn’t do the benefits justice, so let me show the situation in which this product is useful: You are driving your car. Perhaps to the office, perhaps to do your normal chores. It’s just like any other day.

Except it is NOT like any other day. Unexpected flash flood hits your area. You had to leave your car behind and find alternative method to go home. Your car is damaged.

In this case, you may be able to claim:

• The Full Special Perils, which covers loss or damage to your car due to nature-caused calamities, and
• The Inconvenience Relief Allowance*, which pays RM1,000 if your car was stolen, declared total loss or damaged due to flood

Here’s another situational example. You are driving your car, and unlucky enough to get into a serious car accident. You have hurt yourself in the accident and may be left with permanent disability. Your car as well some valuable items in the car are damaged.

In this case, you may be able to claim:

• The Standard Comprehensive Motor Cover, which gives coverage against others (‘Third Party’) AND for yourself in cases of accidents, accidental fire and theft, and
• The Policyholder’s Personal Accident, which pays compensation upon death or permanent disability due to road accident, and
• The Loss or Damage to Personal Belongings*, which pays RM1,000 if your or your authorised driver’s belongings are lost or damaged due to snatch theft or accident, and
• The Transportation Allowance*, which pays RM100 for transportation expenses if your car is involved in an accident and need to be towed for repairs

Note: Special benefit marked as * are only included under MSIG’s Lady Motor Plus Insurance, and not available for sale individually as optional add-on cover

You can also add on additional coverage if you wish: View the Motor Add-on page for more information.

You can find more information on the MSIG’s Lady Motor Plus Insurance, and download the brochure here. A sample cost comparison for this product is on page 10.

(To the men, you can go to MSIG’s Motor Plus page to take a look at another great insurance packaged product .

#5 – Being strategic about your claims

Having car insurance means you should make claims anytime possible, right?

This is counter-intuitive, but you may choose not to submit a car insurance claim if the accident is minor and the claim involves a small sum.

The reason for this is something called No Claim Discount, otherwise known as NCD. Sometimes the term No Claim Bonus or NCB is also used – they mean the same thing.

Basically, NCD rewards you with discounts if you did NOT make a claim. The longer you go without a claim, the bigger the discount.

Pay close attention to the discount scale and how it progressively increases. That means, if you paid RM1600 initially, then you only pay RM720 by the 5th year! You will save 55% or RM880*!

*Simplified calculation. The final amount depends on other variables – See #6

So do you see how making small claims (say in the low hundreds) may not be worth it? It’s not a bad idea to pay for those out of pocket so you get to enjoy bigger NCD discounts in the future.

Of course, do not hesitate to make a claim if the damage or repairs go into thousands or tens of thousands. After all, that’s what car insurance is for. It is for your own financial protection.

(And it goes without saying – you can avoid the claim/don’t-claim dilemma altogether by driving safely and doing your best to avoid getting into accidents. That’s the original intent of the discount – to reward good drivers)

Tip: You CAN claim your insurance without losing your NCD if the accident was caused by another party and you are claiming against their insurance. In this case, your NCD streak is not affected.

#6 – How to get cheaper car insurance in Malaysia

I’m sure you want to learn how to get cheaper car insurance in Malaysia. Yes, it is possible. First, you must learn the factors that affect the price of car insurance.

They are:

• Type of cover – Third party cover is usually the cheapest, and Comprehensive Cover is the most expensive
• Additional benefits and covers – no frills mean no additional costs
• Value of your car – The higher the value, the more expensive the cover
• The type of your car – the higher the theft ratings of your car, or the higher its general accident statistics, the higher the premium will be
• Your risk behaviour – depends on the driver’s age, gender, occupation, residence, claim history, and the frequency of car use
• Taking advantage of No Claim Discount

Depending on all these factors, expect your car insurance to cost from a few hundred to a few thousand ringgit per year. You can also get a guesstimate how much your car insurance will cost – simply look for car insurance calculators online.

Unless you really can’t afford it, you don’t really want to cheap out on the first two variables. Instead, you can:

• Choose a car with smaller value (usually means a cheaper car, but not necessarily)
• Choose a car with lower theft and accident rate
• Maintain a good driving record
• Be strategic about your claims – as covered in #4
• Consider a car insurance package

On the last point. Similar to how it’ll cost less if you get the set meal rather than buying each food item individually, you’ll spend less for more benefits with car insurance packages. Lady Motor Plus Insurance and MSIG’s Motor Plus are both examples of car insurance packages. 

What did you wish you knew before you renew car insurance?

What did you wish you had known before you renew car insurance? What other tips did you learn through experience, and what advice would you give others who are looking for the best car insurance in Malaysia? Leave them in the comments section so all of us can learn!

As an ending note, I’d like to thank MSIG for the chance to write about car insurance. It was great to learn about the Lady Motor Plus Insurance, which takes out much of the guessing game in terms of deciding what coverage and benefits are important for women. It’s also great that some of the benefits are exclusive to this plan and not available elsewhere.

Note: With all insurance products, terms and conditions apply. Speak to an MSIG Insurance Adviser or contact MSIG for more information.