Types of Car Insurance Policies in Malaysia

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An accident occurs and you hear people say that he or she will require third party insurance to cover the damage. What exactly does that mean? There are 3 major types of insurance policies available in Malaysia which are comprehensive insurance, third-party insurance and third-party and fire theft insurance. In Malaysia, motor insurance is a necessity and requirement by law when you purchase a vehicle as it will protect you as a car owner. Even if you are the most careful driver on the road, accidents can happen unexpectedly. Having motor insurance protects you from all the potential risks such as collisions and natural disasters. 
 
There are various factors to be considered before you get your motor insurance including the vehicle's age, value, frequency of usage, and so on. It’s essential for you to choose the right insurance policy which covers your losses and at the same time affordable. Let’s go through the insurance policy one by one.

Third-Party Insurance

Third-party insurance is the most basic insurance policy in Malaysia. It’s mandatory for the vehicle owner to get at least third-party insurance in order to drive on the public road. Third-Party Insurance covers losses for the third party which is involved in the accident caused by your vehicle. This insurance policy provides coverage for the third party and their property. However, this insurance policy provides very limited coverage and it only can be used for third-party claims. If your vehicle sustains any damages, you will need to bear the repair cost on your own.

Third-Party, Fire and Theft Insurance

The third-party, fire and theft insurance is somehow similar to the third-party insurance, but this insurance policy includes protection for the policyholder in the event of fire and theft. Just like third-party insurance, it provides coverage to the third party and protects drivers from third-party claims covering property damage, body injury, and death caused by your vehicle. Typically, this insurance policy is more expensive than third-party insurance and cheaper compared to comprehensive insurance.

Comprehensive Insurance

A comprehensive insurance policy, also known as first-party insurance is the most complete insurance policy offered in Malaysia. It offers the same coverage as the third-party, fire and theft insurance and at the same time provides additional coverage on your own vehicle, not limited to fire and theft only. In other words, it provides coverage for the third party and first party (you).  In Malaysia, new car purchases under bank loans are required to purchase a comprehensive insurance policy. For cars above 15 years old, most of the insurance companies will recommend the third-part, fire and theft insurance policy. 
 
Most car insurance policies will offer extra optional coverage such as special perils, windscreen protection, key replacement, additional drivers, and so on. These optional coverage are not included in the insurance policies as stated above. Vehicle owners could consider the additional coverage based on their own driving preferences and conditions. 

Things to consider when purchasing car insurance

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Vehicle Age

It’s crucial for you to choose the right insurance policy based on your vehicle’s age. This is to prevent you from over-insurance (insuring your car above the market value) or under-insurance (insuring your car below market value). Vehicles that are newly purchased are recommended to get a comprehensive insurance policy as the repairing cost might be higher if unforeseen circumstances happened. While the vehicle which is over 15 years old is recommended to purchase third party, fire and theft insurance as the repairing cost might be cheaper and more affordable.

Frequency of usage

If you frequently use your car, then you are recommended to purchase a comprehensive insurance policy for more coverage. This factor applies to both old and new car vehicles.

Frequency of usage

For vehicles over 10 years old but with a market value of more than RM10,000, you are advised to get comprehensive insurance rather than third-party insurance to ensure your vehicle is adequately covered. Comprehensive insurance prevents you from the high repair cost if accidents happen.

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