In Malaysia, car insurance is a crucial aspect of vehicle ownership, providing financial protection against unforeseen incidents on the road. However, several myths surrounding car insurance persist, leading to misconceptions among drivers. In this comprehensive guide, we’ll debunk 10 common car insurance myths in Malaysia and provide actionable insights to help you make informed decisions when purchasing coverage.
1. All Car Insurance Policy is the Same
It’s a prevailing myth that all car insurance policies offer identical coverage, regardless of the provider. In reality, each type of policy comes with its own unique features and coverage options. While comprehensive coverage provides extensive protection for your vehicle, third-party policies offer minimal coverage for damages caused to others. It’s essential to evaluate your needs and select a policy that aligns with your requirements.
2. Car Insurance Premium Rate is Remain the Same Every Year
Contrary to popular belief, car insurance premiums are not fixed and can fluctuate from year to year. Several factors influence the amount you pay, including the type of policy you choose and your No Claims Discount (NCD) rate. Your NCD rate can increase up to 55% if you haven’t made any claims, resulting in lower premiums. However, filing a claim will reset your NCD rate to 0%, leading to higher premiums during renewal. Additionally, some insurers offer discounts for online purchases, affecting your premium compared to the previous year.
3. Motor Takaful is only for Muslims
There’s a misconception that takaful, with its Arabic name, is exclusively for Muslims. However, both Muslims and non-Muslims can benefit from takaful, which operates similarly to conventional insurance but is based on Islamic principles of mutual cooperation. Takaful involves sharing risks and funds between the insured and the insurer, providing coverage to individuals regardless of their religious affiliation. Hence, the purchase factors are similar to other car insurance, do carefully assess your coverage needs, compare options from reputable providers, and ensure you understand the policy terms and exclusions to make an informed decision.
4. Expensive Cars’ Premium Don’t Always Cost More
While it’s logical to assume that expensive cars come with higher insurance premiums, this isn’t always the case. Some luxury sedans or SUVs may have lower premium rates due to their superior claim rates for accidents or theft, thanks to advanced security features. Conversely, cheaper car models may incur higher insurance costs if they’re more susceptible to theft and lack safety features. Evaluate insurance premiums based on your vehicle’s specific characteristics rather than its price tag.
5. Car Modifications and Accessories are Covered
Car enthusiasts who customize their vehicles with modifications and accessories may assume that these items are automatically covered by insurance in the event of an accident. However, unless you’ve informed your insurer and adjusted your coverage accordingly, these enhancements may not be claimable. Failure to disclose modifications can result in a higher premium due to increased coverage requirements. Exercise caution when making modifications and update your insurance policy accordingly.
6. Damage Caused by Natural Disasters are Claimable
Many drivers believe that comprehensive insurance covers damages caused by natural disasters such as floods, landslides, and storms. However, in most cases, these damages are not insured unless you’ve opted for additional coverage, such as the Special Peril rider. To mitigate risks, avoid driving in disaster-prone areas, park your car on higher ground during heavy rainfall, and exercise caution when commuting in hazardous conditions.
7. You Can Claim for The Stolen Items from Your Car
Contrary to common belief, insurance typically does not cover the loss of personal belongings stolen from your car. To prevent theft, avoid leaving valuables in your car or in plain view while driving. Be vigilant of rising crime rates, especially regarding car thefts in Malaysia, and take proactive measures to safeguard your belongings and vehicle.
8. Third-Party Insurance is Enough
While third-party insurance is mandatory, it only covers damages you cause to others and not to your own vehicle. Comprehensive car insurance offers a broader range of coverage, including damages to your car, medical treatment costs, and complimentary tow truck services. Consider opting for comprehensive coverage to ensure comprehensive protection against unforeseen incidents on the road.
9. No Need for Comprehensive Coverage if Car is Old
Some drivers believe that older cars don’t require comprehensive coverage. However, comprehensive insurance protects against theft, fire, and other non-collision incidents, regardless of your car’s age. Assess the value of your vehicle and potential risks to determine if comprehensive coverage is necessary for your peace of mind.
10. Cheaper Premiums Mean Better Value
While it’s tempting to opt for the cheapest insurance premium available, it may not always provide the best value. Cheaper premiums often come with higher excesses or lower coverage limits, leading to significant out-of-pocket expenses during claims. Prioritize coverage benefits and limits over price to ensure you’re adequately protected on the road.
Although the auto policies in Malaysia may different from company to company depending on the premium to coverage, by understanding the intricacies of car insurance policies and approaching them with a discerning eye, you can navigate the insurance landscape with confidence and peace of mind. Remember to review your policy regularly, stay informed about updates and changes in the industry, and consult with insurance professionals when needed to make the best decisions for your car insurance needs.