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Car Insurance vs Vehicle Warranty: Key Differences Explained

Fatin Haris

Fatin Haris

Last updated 16 October, 2023

When it comes to ensuring the safety of your vehicle, you're faced with two common options: car insurance and vehicle warranty. Whether you're an experienced driver or a newbie in the world of car ownership, it's crucial to distinguish between these two protective measures. In this article, we'll explore the key distinctions between car insurance and vehicle warranty.

Key Differences Between Car Insurance and Vehicle Warranty

Here's a quick glance at the primary distinctions between car insurance and vehicle warranty:


Car Insurance

Vehicle Warranty


Financial protection in case of accidents, theft, or damage

Covers repair costs for mechanical failures and defects


Third-party, comprehensive and Takaful

Manufacturer and extended warranties

Legal Requirements

Mandatory in most regions

Not mandatory; provided by manufacturers or third parties

Coverage Scope

Accidents, theft, and other incidents

Mechanical and electrical failures

Cost Factors

Premiums, deductibles, coverage limits

Purchase price, extended warranty costs

Duration of Coverage

Typically 6 or 12 months, renewable

Limited duration, often measured in years or mileage

Claim Process

Filing a claim, documentation, compensation

Handled through authorized dealerships


Generally not transferable

May be transferable with conditions

Exclusions and Limitations

Pre-existing conditions, high-risk activities, specific damage

Maintenance requirements, wear and tear, neglect


Understanding Car Insurance

What is Car Insurance?

Car insurance is a contractual agreement between you and an insurance company. It provides financial protection in case of accidents, theft, or damage to your vehicle.

Types of Car Insurance

Below are the common types of Car Insurance in Malaysia:

Type of car insurance

What it covers


Basic type of car insurance only covers damage to the other party's car and/or property in the event of an accident. It does not cover damage to your own car or injuries to yourself or your passengers.

Comprehensive coverage

This coverage pays for repairs to your car if it is damaged by non-collision events, such as theft, vandalism, or weather.


An Islamic insurance product that operates on the principles of mutual cooperation and risk-sharing. It offers similar coverage to comprehensive car insurance but with some religious considerations.


Legal Requirements

In many places, having car insurance is a legal requirement. According to the Road Transport Act 1987, all car owners in Malaysia must have valid car insurance and road tax, both of which must be renewed annually. It's crucial to understand the minimum coverage mandated by your region's laws to avoid legal consequences.

Car Insurance Recommendations


Coverage type

Additional Features

Price Range (per year)

Allianz Motor Comprehensive

Comprehensive and conventional

24/7 roadside assistance, free car inspection, and up to 55% NCD

RM1,200 - RM2,400

Zurich Motor Comprehensive 

Comprehensive and conventional

24/7 helpline assistance, first response bike brigade, and up to 60% NCD.

RM1,400 - RM2,800

More recommendations read, Top 5 Affordable Car Insurance Policies in Malaysia for 2023

Understanding Vehicle Warranty

What is a Vehicle Warranty

A vehicle warranty is a warranty provided by either the vehicle manufacturer or a third-party provider. It is a guarantee that covers the cost of repairs and replacements for specific vehicle 

parts or systems for a predetermined duration. This warranty offers peace of mind to new car owners and provides assurance against unexpected mechanical failures.

Learn More: How Do Car Warranties Work? Here's Everything You Need To Know

Manufacturer vs. Extended Warranties

Many new vehicles come with a manufacturer's warranty, which is included with the purchase. Manufacturer warranties typically cover specific components and systems for a set period. Extended warranties, which you can purchase separately, extend the coverage beyond the manufacturer's warranty period, providing additional protection. 

Coverage under Vehicle Warranties

Typically, vehicle warranties cover mechanical failures and defects, providing peace of mind for new car owners.

Choosing the Right Protection

Selecting the right protection for your vehicle is a crucial decision that depends on various factors. Consider your vehicle's age and condition, your driving habits, and your budget. For new vehicles, a manufacturer's warranty can provide essential peace of mind. Still, for older vehicles, it's equally important to have comprehensive car insurance that safeguards against potential accidents and theft, alongside a vehicle warranty that ensures mechanical reliability. Both car insurance and vehicle warranties play vital roles in protecting your investment and enhancing your overall driving experience.


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