YOU have just bought your own set ofwheels and can’t wait to “get your motorrunning” on our spacious highways.
Before you rev that engine up and hit the road,the law requires drivers of motor vehicles tobuy motor insurance.
When we purchase a motor insurance, weare in fact protecting our investment, which,at today’s prices, is probably the second mostvaluable asset after our home.How do we receive protection from ourmotor insurance?
To receive this protection, we, as policyholders, pay a premium to our appointedinsurer. The insurer will then accumulateall premiums collected into a fund which isthen used to compensate any policyholderwho is unfortunate enough to suffer a lossfrom a motor accident.
Thus, a loss is paidfrom the premiums made by the unfortunatepolicyholders and by all the other policy holders who have not met with an accident.What are the types of motor insurancecovers available?
Choosing the right insurance policy is muchlike choosing the right motor vehicle. It isrequired to fit our individual needs and lifestylebut at the same time be within our budget.
Although, the Road Transport Act 1987 requiresus to have a minimum third party liabilitycoverage, other types of coverage are usuallyoptional.
The key to finding which coverage is best foryou involves learning about the three types ofmotor insurance covers in Malaysia. They arethe ‘Act Only’, ‘Third Party’ and ‘Comprehensive’.
The Act Only motor insurance policyprovides the minimum cover required by thelaw, thus giving rise to the name. Under thisAct, drivers of motor vehicles have to buymotor insurance to ensure that drivers canmeet their liabilities if they injure or cause thedeath of other people in an accident.
Act Onlypolicies are rarely purchased as the insuranceprotection is quite limited.Third Party motor insurance is wider than‘Act Only’ insurance. Besides giving coveragainst death and injury to third parties,it provides protection against other legalliabilities such as damage to the property ofa third party (usually somebody else’s car ormotorcycle or a neighbour’s gate) and certainspecified legal costs.
Under the Third Party cover, a policyholdermay opt to include protection for loss ordamage to own vehicle due to fire or theftonly. However, most policyholders have foundit is more cost effective and worthwhile topay a little bit more and be protected underthe Comprehensive motor insurance policyinstead.
While Comprehensive motor insurancepolicy is the widest form of cover available, itdoes not provide cover for every conceivabletype of risk. In addition to that covered in ActOnly and Third Party motor insurance, theComprehensive insurance policy also gives anumber of other types of protection includingloss or damage to the motor vehicle as a resultof fire or theft. More importantly, this policycovers accidental damages to the insured’sown vehicle. This additional cover enables thevehicle owner to have his vehicle repaired,reinstated or replaced in case of accidentaldamage or loss.
On top of these 3 main categories of motorinsurance policies, other additional coverageare available for:
• Breakage of glass in windscreens or windows
• Floods, landslide, landslip or other convulsionof nature
• Legal liability of passengers for acts ofnegligence (such as the passenger openinghis car door and causing an accident with anmoving vehicle)
• Use of private cars for tuition purposes (suchas teaching a novice driver how to drive usingone’s private car)Car owners are advised to enquire with theiragents or insurers on these additional coverageand others as these usually involve additionalpremiums.