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Car Insurance Renewal in Malaysia — Coverage & Savings

· Roda Editorial · Updated

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General information, not financial advice. Check with your bank or insurer before you sign.

Every car on Malaysian roads must have at least third party insurance, and you cannot renew road tax without valid cover. Renewal comes around every year, and it is the best time to check whether your cover still fits the car, the way you use it, and the price you are paying. This guide explains the types of cover, how pricing works since liberalisation, how the no claim discount (NCD) works, and the steps to renew.

This is general information, not financial advice. Policies differ; read the policy wording and ask your insurer or takaful operator about your situation.

Types of cover

Bank Negara Malaysia (BNM) describes three main types of motor cover:

  • Third party: covers your liability for injury or death of other people, and damage to their property. This is the legal minimum.
  • Third party, fire and theft (TPFT): third party cover, plus loss or damage to your own car from fire or theft.
  • Comprehensive: TPFT, plus damage to your own car from an accident.

None of these covers injury to you as the driver. Ask about personal accident cover if you need it.

How pricing works now

BNM liberalised motor insurance in phases. From 1 July 2016, insurers could offer new products and add-ons at market prices. From 1 July 2017, premiums for comprehensive and TPFT cover are set by each insurer or takaful operator, based on factors such as the car, the driver and the claims history. This is why quotes for the same car can differ between insurers.

Compare at least two or three quotes each year, and compare the same cover, sum insured and add-ons.

Sum insured: agreed value or market value

  • Agreed value: you and the insurer agree the car's value at the start of the policy. If the car is a total loss, the payout is based on that value.
  • Market value: the payout is based on the car's market value at the time of loss, after depreciation.

Make sure the sum insured is realistic. If it is too low, you may receive less than the car's value after a total loss. Ask how the insurer handles underinsurance.

No claim discount (NCD)

NCD is a discount on the own-damage part of your premium for each year without a claim. For private cars, the scale published by PIAM (the general insurers' association) is:

  1. One claim-free year: 25%
  2. Two years: 30%
  3. Three years: 38.33%
  4. Four years: 45%
  5. Five years or more: 55%

Things to know:

  • A claim under your comprehensive policy usually resets your NCD to zero at the next renewal.
  • Windscreen claims under a windscreen add-on do not affect NCD, according to PIAM.
  • BNM's FAQ explains "own damage knock-for-knock" claims, where your insurer repairs your car and the claim does not affect your NCD if conditions are met.
  • Your NCD belongs to you, not to the car. When you sell a car or buy a new one, ask your insurer to withdraw the NCD from the old policy so it can be used on the new car. The new car must be registered in the same name. The old car's NCD drops to zero.

Add-ons worth considering

PIAM lists common optional covers. Consider which apply to you:

  • Special perils: flood, landslide and similar natural disasters are excluded from standard policies, according to BNM. If you live or park in a flood-prone area, ask for this cover.
  • Windscreen: covers windscreen repair or replacement.
  • All drivers or named drivers: if other people drive your car.
  • Key replacement and roadside assistance.

Each add-on increases the premium. Choose the ones that match your risks.

How to renew

  1. Check your renewal date. Many insurers send reminders. Start comparing a few weeks before.
  2. Review the car's value, your NCD, drivers and add-ons.
  3. Get quotes from your insurer and at least one other.
  4. Pay and receive the policy. Check that the car registration number, chassis number and your details are correct.
  5. Renew road tax. Once the insurer has sent the policy to JPJ, renew road tax in the MyJPJ app or another JPJ channel. See road tax renewal online.

If you have a hire purchase loan

Banks usually require comprehensive insurance for the whole loan period. Check your hire purchase agreement before changing cover. See the car loan guide.

Making a claim

  1. After an accident, make a police report within 24 hours, as the Road Transport Act 1987 requires.
  2. Take photos, and note the other driver's details and the location.
  3. Inform your insurer as soon as possible and follow its instructions on where to send the car.
  4. Keep all reports, quotes and receipts.

A dashcam recording can help. See our dashcam guide.

If you disagree with your insurer

Complain to the insurer first, through its complaints unit. If you are not satisfied with its final decision, you can bring the dispute to the Financial Markets Ombudsman Service (FMOS), formerly the Ombudsman for Financial Services. FMOS says this is free for consumers and has a time limit after the insurer's final decision; check its website.

Buying or selling a car

When you buy a used car, insure it in your name from the day of the transfer. When you sell, cancel the policy after the transfer and keep your NCD for your next car. See the JPJ ownership transfer guide.

Sources

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