Why Do We Need MOTOR INSURANCE?
YOU have just bought your own set of wheels and can’t wait to “get your motor running” in our highways. Before you rev that engine up and hit the road, the law requires drivers of motor vehicles to buy motor insurance.
When we buy a motor insurance, we are protecting our investment, which is probably the second most valuable asset after our home. HOW DO WE RECEIVE PROTECTION FROM OUR MOTOR INSURANCE?
To receive this protection, we, as policy holders, pay a premium to our insurer. The insurer will accumulate all premiums collected into a fund that is then used to compensate any policyholder who suffers a loss from a motor accident. Thus, a loss is paid from the premiums made by policyholders and all policyholders who have not met with an accident.
WHAT ARE THE TYPES OF MOTOR INSURANCE COVERS?
Choosing the right insurance policy is much like choosing the right motor vehicle. It is required to fi t our needs and lifestyle but, at the same time, be within our budget. Although, the Road Transport Act 1987 requires us to have a minimum third-party liability coverage, other types of coverage are optional.
The key to finding which coverage is best for you involves learning about the three types of motor insurance covers in Malaysia. They are the `Act Only’, `Third Party’ and `Comprehensive’.
The Act Only motor insurance policy provides the minimum cover required by the law, thus giving rise to the name. Under this Act, drivers of motor vehicles have to buy motor insurance to ensure that drivers can meet their liabilities if they injure or cause the death of other people in an accident.
Act Only policies are rarely bought as the insurance protection is limited.
Third Party motor insurance is wider than `Act Only’ insurance. Besides giving cover against death and injury to third parties, it provides protection against other legal liabilities, such as damage to the property of a third party (usually somebody else’s car or motorcycle or a neighbour’s gate) and certain legal costs.
Under the Third Party cover, a policyholder may opt to include protection for loss or damage to own vehicle due to fire or theft only. However, most policyholders have found it is more cost effective and worthwhile to pay a little bit more and be protected under the Comprehensive motor insurance policy instead.
While Comprehensive motor insurance policy is the widest form of cover available, it does not provide cover for every type of risk. In addition to that covered in Act Only and Third Party motor insurance, the Comprehensive insurance policy also gives a number of other types of protection including loss or damage to the motor vehicle as a result of fi re or theft. More importantly, this policy covers accidental damages to the insured’s own vehicle. This additional cover enables the vehicle owner to have his vehicle repaired, reinstated or replaced in case of accidental damage or loss.
On top of these three main categories of motor insurance policies, other additional coverage are available for: Breakage of glass in windscreens or windows Floods, landslide, landslip or other convulsion of nature Legal liability of passengers for acts of negligence (such as the passenger opening his car door and causing an accident with an moving vehicle) Use of private cars for tuition purposes (such as teaching a novice driver how to drive using one’s private car)
Car owners are advised to enquire with their agents or insurers on these additional coverage and others as these involve additional premiums.