How To Calculate Car Insurance Price In Malaysia

While numerous car insurance premium calculators are available online, many Malaysians still need help with how to calculate their car insurance premiums because of their complexity. But fret not! This article will help you understand the factors that affect your car insurance premium and how to calculate car insurance premiums in Malaysia.

What factors affect your car insurance premium?

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

1. Car Market Value

Your car's market value depreciates annually, so you need to get an estimate of its latest market value to insure it appropriately. You can achieve this by either consulting the nearest branch of your car's brand provider, visiting an independent car workshop, or conducting the process online.

2. No-Claim Discount (NCD) 

The NCD system set by Persatuan Insurans Am Malaysia (PIAM) Motor Tariff allows car owners to earn discounts over time if they do not make any claims against their insurance companies each year. 

Refer to the table below for the NCD you are entitled to in different categories of the period:

Table 1: NCD rates set by Persatuan Insurans Am Malaysia (PIAM)

3. Car’s year of manufacture 

Another factor that affects your car insurance premium is the year of manufacture of your car. Newer cars typically have higher insurance premiums than older cars because they are more expensive to repair or replace after an accident. 

4. Type of Car Insurance

The cost of car insurance premiums highly depends on the type of insurance you choose for your car.  

Generally, there are three types of car insurance in the market:

• Third-party
• Third-party, fire & theft
• Comprehensive

Refer to the table below to understand the difference in coverage between these three types of car insurance. 

Table 2: Types of Car Insurance and the Coverage

Wondering what’s the best Car Insurance for you? Compare quotes from multiple insurance companies on CompareHero to find the best deal. 

You can also take advantage of exclusive campaigns and discounts on CompareHero, such as the RM30 Touch 'n Go eWallet Credit that you can claim when you renew your car insurance with Allianz Comprehensive Motor Insurance or Zurich Comprehensive Motor Takaful from now until 31 August 2023. Renew your car insurance via CompareHero Now! 

Related: Why Flood Coverage Is Important To Protect Your Car?

4. Location

If you live in a city in West or Peninsular Malaysia, your car insurance premium will be higher than those who live outside of city areas in East Malaysia mainly because of the following: 

• Traffic density: Cities tend to have more traffic than rural areas. This means that there is a higher risk of accidents, which can drive up insurance premiums.
• Crime rates: Cities also have higher crime rates which increase the risk of theft.
• Weather: Flash floods are often the case in big cities. This can damage cars and increase the cost of claims.

As a result, insurance companies charge higher premiums for cars in cities to protect their investment.

5. Car’s Cubic Capacity (cc)

A car with a larger cubic capacity (cc) or engine capacity is more expensive to insure than a car with a smaller engine capacity. This is simply because cars with larger cubic capacities are more powerful and can cause more damage in an accident

Refer to the table below to see how your car's cubic capacity affects the cost of your car insurance premium:

Table 3: The cost of a car insurance premium based on your car’s cubic capacity

Now that you understand some of the factors that affect your car insurance premium, let's delve into the car insurance premium formula with a few examples to help you understand it better.

How to calculate your car Insurance Premium?

Calculating your car insurance basic premium in Malaysia is a relatively simple process. It is crucial to calculate the basic premium of your car insurance policy, as it is the foundation of your policy. The basic premium is the amount of money that you pay for the core coverage of the policy, without any additional benefits or features.

Here are the steps involved:

Car Insurance Basic Premium Calculation in Malaysia

• For West Malaysia, the basic premium for a new car of each category =
  • The comprehensive rate for the first RM1,000 sum insured (from Table 3) + 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 = 
  • The comprehensive rate for the first RM1,000 sum insured (from Table 3) + RM20.30 for each RM1,000 or part thereof on value exceeding the first RM1,000.

Comprehensive and Third-Party, Fire & Theft Car Insurance Premium Calculation in Malaysia

Let’s check out the example for Car Insurance Premium Calculation for Comprehensive and Third Party, Fire & Theft Coverage (West Malaysia).Table 4: Example of Car Insurance Premium Calculation for Both Comprehensive and Third Party, Fire & Theft Coverage (West Malaysia). 

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

Table 4 below shows the calculation of the gross premium for a four-year-old Proton Wira 1.5 cc 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 3).

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

To get the final premium payable for 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).

The premium for third-party, fire & theft insurance is calculated as follows:

• Third-party, fire & theft coverage premium = 
• 75% (Comprehensive coverage premium) – 25% NCD +6% GST + stamp duty (RM10.00)

In addition to third-party, fire & theft insurance, some insurance companies may offer optional insurance coverage such as flood and theft packaged with the third-party coverage. It is important to ask clearly what you are paying for and what coverage you are getting.

Optional Insurance Charges

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

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

Save yourself the headache. Get an estimation of your car insurance premium easily through this calculator.

Note that the actual car insurance premium you pay may vary depending on the factors discussed above, such as car market value, no-claim discount, manufactured year of the car, and more. The insurance company you choose and the specific coverage you select can also be a factor. Knowing how to calculate car insurance premiums would help you get a car insurance premium that meets your needs and budget.

Compare Car Insurance on CompareHero and win exciting prizes!