3 Main Types of Car Insurance Coverage (And What They Actually Cover)
In Malaysia, there are 3 types of car insurance coverage, namely first party, second party, and third party. How do these car insurance policies stack up? Read more to find out the pros and cons before you decide to purchase.
Take a stone and throw it in a car park full of drivers. Chances are, you’ll hit one who doesn’t know what their exact insurance policy covers.
If you don’t know what is insurance coverage, it’s basically a contract between you and the insurance company that provides you with financial protection against physical damage or bodily injury. This protection will only be applicable for traffic or vehicle-related incidents, and comes at a premium which must be paid annually.
It’s completely mandatory for all drivers in Malaysia to get a valid car insurance policy. Without that, you won’t be able to renew your road tax through the Road Transport Department (JPJ). And without your road tax, you won’t be allowed to drive on Malaysian roads legally. If you get caught without a valid road tax, Section 14(4) of the Road Transport Act (RTA) 1987 would leave you with a fine of up to RM3,000.
Legally, you’ll be breaking the Road Transport Act 1987 and you can be fined up to RM1,000 and/or spend up to three years behind bars. As we mentioned previously, there’s a RM3,000 fine if you’re caught driving without a valid road tax. Since you can’t renew your road tax without first renewing your car insurance, you’ll likely end up with both fines.
But that’s just the legal part of things. The other headache would come with the repairs. You will obviously have to fork out your own money to cover the costs of the damages to the other party (if you’re in the wrong) and yourself. You may or may not also have to pay for treatments for bodily injuries.
Not having a valid car insurance policy will eventually bite you back where it hurts (your wallet), so always make sure that your policy is up-to-date.
So… what does car insurance cover in Malaysia?
It all depends on the type of car insurance coverage you sign up for. There are three main types of car insurance in Malaysia: third party; third party, fire, and theft (a.k.a. second party), and comprehensive.
If you’re confused over these wordings, here’s a quick overview of how insurance companies term them:
- First party → you, the driver
- Second party → the insurance company
- Third party → everyone else
To know what your car insurance covers, you need to first check which one of the three types your policy falls under. Do note that the table below is by no means an exhaustive list. Insurers may or may not add and subtract benefits to your coverage, so it’s best to double check your policy for a more accurate picture.
|Policy||What it covers||What it does not cover|
|Third party, fire, and theft (a.k.a. Second party)|
Same as above:
|Comprehensive (a.k.a. first party)|
Same as above:
In addition to above, most comprehensive policies also come with a free tow truck service, depending on how far your vehicle is from the nearest panel workshop. Some also provide you with a 24-hour roadside assistance service, so you’ll always have help if you’re stranded in the wee hours of the morning.
And what damage does car insurance not cover in Malaysia?
On top of the table we’ve shown you, these are some of the most popular damages where insurance companies don’t typically cover – even in a typical comprehensive policy:
- Damage to the windscreen
- Damages to fancy car accessories (e.g. LED lights, massive subwoofers)
- Damage to properties (e.g. homes, gates, shops)
- Damage from flood, windstorm, landslide, and other natural disasters
- Damages due to malicious damage or riot, strike, and civil commotions (because technically the policies are meant to cover accidents from driving)
- Compensation for loss of use
So, yes, if your ex-partner got mad at you and decided to wreck your car, you unfortunately will not be able to claim for that. However, there are various add-ons that you can include in your policy. They obviously come with a higher premium, so speak to your agent to see what your options are.
Driving has its risks, so be prepared for anything that comes your way
It’s better safe than sorry when it comes to driving, especially since you’re not the only person at risk – you will also be putting everyone else at risk, too. Nobody likes forking out money for insurance, but your wallet will thank you if and when you get into trouble on the road.
Without insurance, you will have to foot the bill on your own. While certain damages don’t cost much, some can go up to tens of thousands – not a sum you would gladly pay.