Renewing car insurance is one of the things car owners do annually, but do you know how car insurance works in Malaysia?
Here are the things you must know about car insurance:
Different types of car insurance available in Malaysia:
Third party cover
This is the most basic car insurance, and it is compulsory for all car owners in Malaysia to have third party cover in their insurance package.
This policy protects car owners from having to pay the damages of another vehicle due to an accident.
Third party cover, fire and theft
Other than third party cover, this policy provides coverage to a car owner’s vehicle such as losses incurred due to fire or theft. Needless to mention, this policy is more expensive than the third party cover.
This policy offers the most enhanced coverage among the other policies, and therefore it’s most expensive. It covers third party, fire and theft, plus damage to your vehicle in the event of an accident.
A comprehensive cover can be customized as you can get additional coverage based on your requirements by paying more.
Factors that determine the premium of a car insurance policy
Many factors determine your car insurance premium, especially in comprehensive policies. Some of the factors are also identified as ‘risk factors’:
Crash rates are higher for all drives below age 26; therefore, you’re considered a riskier driver if you’re below 26 years or above 69 years. Hence, you’ll be charged more for a higher premium.
Age of the vehicle
If your vehicle is more than ten years old, it’s considered more accident-prone — something that’ll increase the price of your insurance premium.
In general, vandalism, crashes and theft rates are higher in big cities; urban drivers need to pay a higher insurance premium than those who live in small towns.
Your vehicle’s price is directly proportional to your vehicle’s insurance premium. A vehicle with more powerful engines are considered riskier; therefore incur higher premiums. Interestingly, some well-known cars are considered ‘theft-prone’ and incur higher insurance premiums.
Insurance premiums for rebuilt vehicles also tend to be more costly. Cars that have anti-theft systems and enhanced braking systems help to increase your vehicle’s safety. As a result, insurance premiums are cheaper for them.
No-Claim Discount (NCD)
Not claiming insurance during the insurance coverage term is considered reward-worthy, which means you’re a safe driver. Hence, insurance companies extend NCD to car owners upon their renewal.
You’re entitled to 25% NCD on your first insurance premium renewal, 30% in the second, 38.33% in third, 45% in fourth and up to 55% in your fifth renewal.
With more and more cars on the road, we know for a fact that accidents are unavoidable!
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