Motor insurance is an essential requirement for all motorists. With insurance, you can’t renew your road tax. There are some particulars your car insurance agent doesn’t tell you. You should know about it because you are paying an annual premium for it.
In Malaysia, there are three types of motor insurance coverage: Comprehensive, Third-party and Third-party fire and theft. Most vehicle owners subscribe to comprehensive coverage as it pretty much takes care of everything in the event of an accident, you and the other party involved. Bear in mind, there are plenty of clauses within an insurance policy, often overlooked by a policyholder. Most vehicle owners are probably unaware of market value and agreed value with regards to the vehicle’s sum insured, in the event of total loss from an accident or the vehicle is stolen.
A motor insurance policyholder should understand the differentiation between market value and guaranteed (agreed) value of insurance coverage. Market value is interpreted as: when you purchased a new vehicle with displacement between 1.4 – 1.6l costing RM100,000, for example, you are required to pay an comprehensive insurance premium ov RM2,848 for the first year. The premiums go down on the second year onwards and up to 55 percent discount or NCD (no claim discount), whenever you renew your motor insurance. Here’s the thing, market value of your vehicle will depreciate through the years. This means your car is worth a little less year after year. Should you get involved in accident few years down the line, your insurance policy would pay you less based on the current market value of your car.
Due to value depreciation of vehicles, some more drastic than others, and depending on premium models or brands, it’s advisable to consider agreed value motor insurance. When you opt for guaranteed value, you won’t lose your car’s value over time and should you get into an accident or a total loss situation, your insurance would pay you the amount your car’s worth as agreed in the policy. However, do bear in mind that guaranteed value insurance costs more than the usual insurance premium.
Which should you go for?
For most people, the general motor insurance is more than sufficient. Guaranteed value insurance is meant for owners of premium, limited-edition and high-valued cars.
Last but not least, be wise to choose a reputable motor insurance provider for greater peace-of-mind and easy access when it comes to reimbursing your claims, when you needed it most. Never settle for the lesser known insurance providers or you’d end up being miserable. These days, reputable insurance companies even provide 24-hour roadside assist and free towing services.