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5 Malaysian Car Insurance Myths You Need to Ignore

Malaysians, regardless of whether you’re a first-time car owner, an individual who enjoys driving, or a person who drives only because you have to, you’re probably well aware of the existence and significance of car insurance plans.

How much do you know however, about the detariffication of car insurance plans by Bank Negara Malaysia (BNM) between 2016 and 2017?

Here’s a brief summary of what happened:

BNM released its control over local motor and fire tariffs through two phases. In the first phase that was introduced in July 2016, car insurance providers were officially given the ability to create and offer new insurance products and additional covers at market prices.

The second phase, which was initiated in July 2017, permitted insurance providers and takaful operators to determine the prices of premiums for car insurance plans according to their own assessments of customers.

This means that car insurance providers can now provide insurance plans which are completely catered to your personal needs, with varying coverages and premiums.

It also means that a lot of things which you may have believed to be true about car insurance in Malaysia have become myths; myths which you should throw away, because they could prevent you from fully enjoying the benefits of a car insurance plan.

| See also: 5 Things Your Car Insurance Policy Won’t Cover |

Here’s a list of five such myths, along with reasons why they need to be abandoned today!

MYTH 1: “All car insurance plans have the same features.”

Why should I throw this away? Various car insurance plans now have varying features and coverages, depending on the kind of protection that you would like for your vehicle.

As was the case before the detariffication, car insurance plans are still currently divided into three categories: Third Party Coverage, Third Party with Fire and Theft Coverage, and Comprehensive Coverage.

The difference? Each category now provides varying levels of compensation and coverages that you can customise with additional covers and add-ons according to your preferences. Carefully evaluate your needs and decide on the optional benefits that would complement the driving scenarios you would find yourself.

For instance, if you’re an audiophile and looking to pimp up your new ride with a bombastic sound system, vehicle accessories cover will provide a safety blanket should you be a victim of theft. Just like windscreen coverage, getting this add-on costs 15% of the sum insured. If you insure your stereo system for RM1,000, then the premium for this will cost you RM150.

MYTH 2: “Car insurance policies take a long time to help.”

Why should I throw this away? Numerous car insurance providers do provide quick help when their clients run into trouble with their cars.

As car insurance providers now play a bigger role in creating car insurance plans that best suit their clients, many provide prompt assistance and responses when a call for help is issued after a car encounters a problem. Allianz’s Enhanced Road Warrior plan is a good illustration of this, as it grants its clients 24-hour access to free towing services.

Some plans also allow for the fast approval of claims, if they happen to be within a specific monetary range. AXA’s SmartDrive Enhanced plan, for instance, allows for claims of RM5,000 or less to be approved in four working days – as long as all necessary documents are submitted.

MYTH 3: “All car insurance plans are equally expensive.”

Why should I throw this away? The premium that you actually pay for a car insurance plan now changes according to a variety of factors.

First and foremost, identify the kind of coverage your plan provides. The higher the coverage of your plan and the more add-ons you attach to it, the higher your premium will be. For example, a Third Party Coverage plan is cheaper than a Comprehensive Coverage plan, but the latter offers more protection than the former.

Moreover, premiums can also differ from one provider to the next. The premium you pay for a Comprehensive Coverage plan from Etiqa Insurance may differ from that from Tokio Marine, for instance, as these providers may price the components of their insurance plans differently. Keep in mind that your NCD is unaffected when you move between insurance or takaful operators!

MYTH 4: “My driving habits have no influence on my car insurance.”

Why should I throw this away? Your driving habits and history influences the price you pay for your car insurance plan.

As mentioned above, following the detariffication of motor insurance plans, the premium you pay a car insurance provider now depends largely on a variety of factors, with another major consideration being your personal risk profile. This risk profile is established based on a few elements of your personal life, including your age, your gender, the amount of experience you have as a driver, your history of traffic and other offences, and even your car insurance claims history.

The better your personal risk profile, the lower the premium that you will be required to pay for a car insurance plan. You can also reduce your car insurance premium rate through a number of other strategies. Want to find out how? Finder have some tricks for you!

MYTH 5: “My car insurance premium rate is always fixed.”

Why should I throw this away? The premium you pay annually for your car insurance plan can change due to a variety of reasons.

Aside from aforementioned elements like your risk profile – which constantly changes – and your choice of coverage, the premium you pay each year is also influenced by your No Claim Discount (NCD). This is a system through which you are rewarded for not having made any insurance claims in a period of 12 consecutive months.

For example, if you do not make any insurance claims in your first 12 months of having a car insurance plan, you will receive a discount of 25% on your premium payment for the following year. This discount then grows as the number of consecutive claim-free years you have increases, and only reaches a limit when you have five or more consecutive claim-free years under your belt, as seen below:

Period of Insurance Without Claims

Discount On Following Year’s Renewal Premium Rate (%)

One continuous claim-free year


Two continuous claim-free years


Three continuous claim-free years


Four continuous claim-free years


Five continuous claim-free years


Furthermore, car insurance providers may also provide a discount on the premium that you need to pay for a plan if you renew that plan online. A good illustration of this would be Tune Protect Motor Easy’s insurance plan which gives owners a 10% rebate on their renewal premium if it is done online.

Ready to drive?

Evidently, the move by BNM to liberalise the provision of motor insurance plans has changed a number of things in the world of car insurance plans. Many of these changes are extremely beneficial, as they allow you to find and obtain car insurance plans that truly match you and your lifestyle.

You should also make it a habit to stay informed on developments in this area. After all, car insurance plans are a mandatory component when it comes to driving in or owning a car in Malaysia – and a truly prepared driver always know his insurance plan like the back of his hand!

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