How Do You Calculate Your Car Insurance Premium in Malaysia?


how-to-calculate-car-insurance-premium

While there are a number of car insurance premium calculators available online, many Malaysians are still wondering what is the exact formula used to calculate their own car insurance premium and also, what are the factors involved?

The structure is slightly complex but with the tables shown below, we will break down the formula into different segments and to help you understand how car insurance premium in Malaysia is calculated.

Before you buy or renew your car insurance, you will need to know a few things first:

1. Your Car’s Gross Market Value

Your car’s market value depreciates on an annual basis and you must be able to get an estimation of your car’s latest market value to be able to insure it accordingly. You can either consult the nearest branch of your car’s brand provider, independent car workshop or just do it online!

2. No-Claim Discount (NCD) and Manufactured Year of the Vehicle

The NCD system (set by authorities and followed by insurance providers) allow car owners to enjoy discounts over time if they do not claim any damages from their insurance companies each year. Refer to the table below for the NCD you are entitled to in different categories of the period:

Coverage Duration

Discount (%)
First Year

25

2nd Year

30

3rd Year

38.33

4th Year

45
5th Year

55

Table 1

3. Types of Car Insurance

As you may already know, there are three types of car insurance in the market: comprehensive; third party fire, and theft; and third party standalone.  To calculate the car insurance premium of a third party (insurance owned by the majority of car owners), you will need to start by calculating the comprehensive insurance coverage.

4. Your Location

If you live in West Malaysia, you will be charged a higher car insurance premium than those in East Malaysia due to higher risks and the car’s higher market value in West Malaysia in general.

5. Your Car’s Cubic Capacity

Basically, this is the engine power of your car and it is important as it determines the car insurance basic premium you will need to pay according to the latest table below for both West and East Malaysia.

Private Car Schedule of Premiums

West Malaysia (RM)

East Malaysia (RM)
Cubic Capacity (cc) Not Exceeding *Comprehensive  (X – Rate for first RM1,000 sum insured) Third Party *Comprehensive  (Rate for first RM1,000 sum insured)

Third Party

1400

273.8 120.6 196.2 67.5
1650 305.5 135.0 220.0

75.6

2200

339.1 151.2 243.9 85.2
3050 372.6 167.4 266.5

93.6

4100

404.3 181.8 290.4 101.7
4250 436 196.2 313.0

110.1

4400

469.6 212.4 336.4 118.2

over 4400

501.3

226.8

359.5

126.6

Table 2

Formula to Calculate Your Car Insurance Basic Premium

For West Malaysia, the basic premium for a new car of each category =

Comprehensive rate for first RM1,000 sum insured (from the table above) + RM26 for each RM1,000 or part thereof on value exceeding the first RM1,000.

For East Malaysia, the basic premium for a new car of each category =

Comprehensive rate for first RM1,000 sum insured (from the table above) + RM20.30 for each RM1,000 or part thereof on value exceeding the first RM1,000.

An example of Car Insurance Premium Calculation for Both Comprehensive and Third Party, Fire & Theft Coverage (West Malaysia):

car-insurance-premium-example

(Table 3) Note: The above rates are for private owned vehicles only and may differ from the actual premium. Coverage is subject to acceptance by the insurance company. 

Table 3 shows the calculation of gross premium for a four year-old Proton Wira 1.5 with the insured sum of RM50,000 for both comprehensive and third party, fire & theft coverage. With cubic capacity (cc) at 1468, the basic premium will be calculated using the second tier in the previous table (refer to Table 2).

Though the car may be four years old, (d) 25% NCD is applied here and it is possibly because the owner has made a claim two years ago which disqualified him from enjoying the fourth year NCD (refer to the Table 1).

To get the final premium payable for a comprehensive insurance coverage, you need to add in 6% GST, optional insurance coverage (windshield, flood, audio system and others listed below) and a stamp duty fee of RM10.

Final Premium Payable for Comprehensive Coverage =

Gross Premium + Optional Coverage (If any) + 6% GST + Stamp Duty (RM10.00)

If you are only opting for a third party, fire, and theft insurance coverage, you will need to find out 75% of the gross premium for your car’s comprehensive insurance. Then, you can get the premium payable after deducting NCD (if applicable) and adding on GST as well as stamp duty.

Formula of Third party, fire & theft coverage premium =

75% (Comprehensive coverage premium) – 25% NCD +6% GST + stamp duty (RM10.00)

Optional Insurance Charges

Some insurance companies may offer optional insurance coverage such as flood and theft packaged with the third-party coverage, so make sure you ask clearly what you are paying for as well as coverage.

(Note: Comprehensive insurance coverage does not include optional insurance coverage as listed below.)

  • Audio system and windshield – 15% of sum insured.
  • Driver (first two are free) – RM10.00
  • Strike, Riot & Civil Commotion (SRCC) – 0.3% of sum insured.
  • Special Perils (Flood, Landslide, Storm) – 0.5% of sum insured.
  • Legal liability for Passenger Act of Negligence – RM7.50 per vehicle.

If you prefer to save yourself the headache, you can easily get an estimation of your car insurance premium through this calculator. However, it is always better to check it on your own and ask us any question if you have any!