MOTOR INSURANCE

When you purchase a motor vehicle, motor insurance is a nessesity. There are, however, many types of motor insurance policies available.

The common types are:

• Third party cover - This policy insures you against claims for bodily injuries or deaths caused to other persons (known as third party), as well as loss or damage to third party property caused by your vehicle.
  
• Third party, fire and theft cover - This policy provides insurance against claims for third party bodily injury and death, third party property loss or damage, and loss or damage to your own vehicle due to accidental fire or theft.
  
• Comprehensive cover - This policy provides the widest coverage, i.e. third party bodily injury and death , third party property loss or damage and loss or damage to your own vehicle due to accidental fire, theft or an accident.

Exclusions/extensions

A standard motor insurance will not cover certain losses, such as your own death or bodily injury due to a motor accident, your liability against claims from passengers in your vehicle (except for passengers of hired vehicles such as taxis and buses) and loss or damage arising from an act of nature, such as flood, storm and landslide. However, you may pay additional premiums to extend your policy to cover flood, landslide, and landslip as well as cover your passengers. It is important that your policy be checked for the exclusions.

Important Points to note when buying motor insurance cover

Insured value/sum insured

If you are buying a policy against loss/damage to your vehicle, you must ensure that your vehicle is adequately insured as it will affect the amount you can claim in the event of loss/damage. For a new vehicle, the insured value will be the purchase price while for other vehicles, the insured value is the market value of the vehicle at the point you apply for the insurance policy.

Under-insurance - If you insure your vehicle at a lower sum than its market value, you will be deemed 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.

Duty of disclosure

You should disclose fully all material facts, including previous accidents (if any), modification to engines, etc.  When in doubt as to whether a fact is relevant or not, it is best to ask your insurance company.  If you fail to disclose any material fact, 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 you pay for your motor insurance will depend on the type of policy selected. The insurance premium charged by your insurance company is the standard minimum rate in accordance with the Motor Tariff.

No-claims-discount

The premium payable may be reduced if you have no-claim-discount (NCD) entitlement. NCD is a 'reward' scheme for you if no claim was made against your policy during the preceding 12 months of policy. 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.

Excess

Also known as a 'deductible'. This is the amount of loss you have to bear before your insurance company will pay for the balance of your vehicle damage claim. The types of excess applicable are as follows:

Compulsory excess of RM400 - if your vehicle is driven by a person not named in your policy or a person named in your policy who is under the age of 21, the holder of a provisional (L) driving licence or the holder of a full driving licence of less than two years.

Other excess - applicable at the discretion of your insurance company and in some cases, no excess is imposed. You can negotiate with your insurance company on this excess.

Insurance cover note/policy

When you purchase a motor policy, you will usually get a cover note. You should check your personal details as well as details of vehicle, insurance and premiums. Within one month from the date of cover note issuance, you should receive:

• the Schedule which shows your name and address, details of the vehicle, the sum insured (for comprehensive and third party fire & theft policies), the period of insurance, the policy number, your NCD entitlement, premium breakdown, excess and named drivers;
  
• the certificate of insurance which shows your name, vehicle model, registration number and cubic capacity, period of insurance, authorised drivers and limitations of use.  In some cases, this may be issued at the point of purchase in place of the cover note; and
  
• a motor policy which shows the terms and conditions of cover provided by your insurance company.

If you do not receive your policy within one month, you should check with your insurance company.

For more information please refer to www.insuranceinfo.com.my. A consumer education program by Bank Negara Malaysia, LIAM, Malaysian Takaful Association, PIAM.

For further information about this product, please contact our nearest branch and our customer service staff will gladly assist you.