You need motor insurance when you buy a motor vehicle. Motor insurance covers your vehicle, be it a motorcycle, a car or a lorry, in case of accidents or theft.
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  Third party cover Third party, fire & theft cover Comprehensive cover
  Liabilities to third party for:  
Property loss/damage
Yes Yes
  Loss/damage to own vehicle due to accidental fire/theft  
No Yes Yes
  Loss/damage to own vehicle due to accident  
No No Yes
  Liability to driver and passenger of own vehicle (bodily injury, property, death)  
No No No
  Your standard motor insurance policy does not cover:  
Your own death or bodily injury;
Your liability against claims from your passengers;
Theft of non-factory fitted vehicle accessories (car stereos, leather seats, sports rims etc) unless otherwise declared.
Consequential loss, depreciation, wear and tear, mechanical or technical breakdown failures or breakages; and
Loss/damage arising from an act of nature, e.g. flood, lanslide.
  However, you may pay additional premium to cover some of the above exclusions, e.g. floods or your liability against claims from your passengers. Windscreen and vehicle accessories covers are also useful extensions to consider preserving your No-Claim-Discount (NCD) in the event of loss/damage. You can check for other exclusions and extension covers available with your insurance agent or company.  
  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.  
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.
  Below are some terms commonly used in motor insurance. If these are still unclear, or for a more specific explanation of these terms, do not hesitate to ask your insurance company or its agents.  
No-claim-discount (NCD)
  The premium payable may be reduced if you have no-claim-discount (NCD) entitlement.  
  NCD is a ‘reward’ scheme for policy holders who have no claims made against their policies during the preceding 12 months.  
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
Other excess
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.
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 policy  
When you buy a motor policy, you will get a confirmation slip containing details of your motor cover as confirmation of purchase.
Within one month from the date of your insurance purchase, you should receive:
The Schedule
which shows:
The certificate of insurance
which shows:
your name and address
your name
details of the vehicle
vehicle model
the sum insured (for comprehensive and third party fire & theft policies)
registration number and cubic capacity
(engine CC)
the period of insurance
period of insurance
the policy number
authorised drivers
your NCD entitlement
limitations of use
premium breakdown
named drivers
  In some cases, this may be issued at the point of purchase.
  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.  
  The most commonly used loading factors are your age, any adverse driving characteristics, cubic capacity (engine CC), specific claims experience of your vehicle and re-conditioned vehicles. The insurance company can apply a loading on you to ensure that the amount charged commensurates with the risk borne by them.  
  The insurance cover will compensate your loss by putting you back to the same financial position as you were in immediately before the loss. You cannot profit from an insurance claim.Therefore if your vehicle is more than 5 years old, betterment will apply.  
  Betterment is, when you repair your vehicle after an accident, and you need to replace one part with a new franchise part, for example, your old bumper is replaced with a new franchise part. The application of betterment however, is at the discretion of your insurance company. If they apply betterment, it will be in accordance with the standard scale of betterment adopted by the industry.  
  The electronic cover notes system under JPJ eINSURANS is part of the e-Government initiative undertaken by the Ministry of Transport for road tax renewal. With effect from 2 January 2005, insurance companies and takaful operators will transmit motor insurance/takaful information electronically to the Road Transport Department (RTD) and policy owners will receive confirmation slip from their insurance companies/takaful operators/agents as proof of insurance/takaful purchase. Upon confirmation of successful transmission by insurance company/takaful operator/agent concerned, policy owners will then proceed to either RTD or Pos Malaysia offices for road tax renewal.

The electronic cover notes system will be operational for new registration and renewal of road tax only whereby physical motor insurance/takaful cover notes/policies will not be required for road tax renewal.
Important notice
Vehicle owners must ensure that they:

provide a copy of their vehicle registration card to their insurance company/takaful operator/agent at the point of purchase of motor insurance/takaful cover;

receive the confirmation of successful transmission of their cover note information to JPJ from their insurance company/takaful operator/agent prior to road tax renewal; and

contact their insurance company/takaful operator/agent for assistance in the event they face difficulties in road tax renewal.
  When you are involved in an accident, you may either make an own damage claim or a third party claim:  
  Own damage claim  
  This refers to making a claim on your own insurance policy.
You will lose your NCD entitlement
  When notifying your insurance company of the accident, ask about the names of approved workshops near your location to send your vehicle for repair.  
  The workshop will commence repairs on your vehicle upon the approval of your insurance company.  
  Submit the fully completed Motor Accident Report Form together with all supporting document as soon as possible to your insurance company.  
  Upon completion of repairs, you will be informed by the workshop to collect your vehicle.  
  Third party claim  
  You may make a third party claim if you did not cause the accident you were involved in
(i.e. someone rams into your car because they beat a red light). You will retain your NCD entitlement.
  There are two ways of making a third party claim:  
  Submit the claim directly to the insurance company of the party at fault, or  
  If you have a comprehensive policy, submit the claim to your insurance company. You are encouraged to submit your claim to your own insurance policy for speedier claims.  
  Appoint a licensed adjuster to assess the loss. The workshop or the third party insurance company may advise you on this.  
  As the third party claimant, you must act to minimise your losses.  
  Submit the adjuster’s report and the fully completed Motor Accident Report Form together with all supporting documents as soon as possible.  
  You are eligible to claim from the third party insurance company for ‘loss of use’ and compensation of excess. For the ‘loss of use’ of your vehicle under repair, this is based on the adjuster’s recommendation on the number of days required for your car to be repaired. Insurance companies, at their own discretion, may allow an additional seven (7) working days for any unforeseen or unavoidable delay. A standard scale of daily ‘loss of use’ has been specified by PIAM as follows:  
  Private Use Vehicles 'Loss of Use' / Day
Up to 1500cc
Above 1500cc – 2000cc
Above 2000cc
RM 30
RM 40
RM 50
  Commercial Vehicles  
Up to 1 ton
Above 1 ton – 2 tons
Above 2 tons
Trailer Lorries
Buses (Private)
Other Buses (Stage/Express)
Taxi/Hire and Drive
RM 40
RM 60
RM 90
RM 120
RM 90
RM 180
RM 40
Up to 250cc
Above 250cc
RM 10
RM 15
  Or, you may claim the cost of renting a replacement vehicle of equivalent type and capacity for the recommended number of days of ‘loss of use’ as evidenced by a receipt from a licensed car rental company.  
  Theft claims  
  In terms of a stolen vehicle, there are a few procedures that must be followed:  
  You must submit a detailed report about the stolen vehicle, including a police report.  
  After submitting the claim form, you must cooperate fully with your insurance company or its representative during the course of investigation of the theft claim.  
  In view that the police and your insurance company will require time to investigate your claim, you will receive the offer of settlement from your insurance company within six months from the theft notification or upon completion of police investigation, whichever is earlier.  
To better understand your Motor Insurance policy, download our booklet or visit our FAQ section on motor insurance. You may also contact an insurance company for further explanation.

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