Car Insurance Tips
There are many important considerations when it comes to buying a
vehicle. Insurance is one of them. Read these important points to note when
it comes to buying motor insurance:
Insured value/sum insured
You need to protect your interest by purchasing a motor insurance to ensure
that your vehicle is adequately insured so that you will receive the claim
amount in the event of loss or damage.
For a new vehicle, the insured value is the purchase price. For other
vehicles, the insured value is the market value of the vehicle when you
apply for insurance policy.
It is important to insure your vehicle for its exact amount to prevent the
following circumstances:
Under-insurance – If you insure your vehicle at a lower sum than its market
value, you are considered as self-insured for the difference, i.e. in the
event of loss / damage, you will only be partially compensated (up to the
proportion of insurance) by your insurance company.
Over-insurance – Should you insure your vehicle at a higher sum than its
market value, the maximum compensation you will receive is the market value
of the vehicle as the policy owner cannot ‘profit’ from a motor vehicle
claim. Therefore, you would have paid higher premiums for nothing.
Duty of disclosure
Disclose all material facts fully, including previous accidents (if any),
modifications to engines, etc. When in doubt as to whether a fact is
relevant or not, ask your insurance company. By failing to reveal any
material facts, your insurance company may refuse to pay your claim or any
claim made by a third party against you. In such cases, you are personally
liable for such claims.
Price
The price of motor insurance depends on the type of policy you select. The
insurance premium charged by your insurance company is the standard minimum
rate in accordance with the Motor Tariff. You can compute the standard
premium charged from the premium calculator here.
In addition to the standard minimum rate, your insurance company may impose
additional premiums known as loadings to the premium payable in view of
higher risk factors involved such as age of vehicle and claims experience.
Loadings are governed by Bank Negara Malaysia (BNM) and no insurance company
may charge loadings higher than the levels permitted by BNM.
Reward schemes such as no-claim-discount (NCD) can also let you save money
by reducing your premium. Different NCD rates are applicable for different
classes of vehicles. For a private car, the scale of NCD ranges from 25% to
55% as provided in the policy.
Sources: www.insuranceinfo.com.my
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