What is Comprehensive Car Insurance?
You're on the road and God forbid, you had a fender bender with another car, where you're at fault. You are liable for the damages to both vehicles - yours and the other person's. Here is where comprehensive car insurance comes into play!
While most car owners are familiar with what comprehensive motor insurance is, let's take a closer look at the array of questionable scenarios that may pop up, giving you a clearer idea of what to expect from it. We sought to create this informative guide in an easy-to-understand manner for our readers.
In layman terms:
“Comprehensive motor insurance covers losses & damages caused by an authorized driver driving your car for both your car and the 3rd party property or people involved if any”
Who’s the 1st party, who’s the 2nd, and who’s the 3rd?
To break it down simply, the 1st party refers to the primary subject or item being insured, in this case your car. The 2nd party refers to the insurance company (insurer). The 3rd party refers to the other parties involved directly that suffered the losses or damages that you have caused.
My car only? How about me?
As it says, it is a car insurance, not a personal accident insurance. For the latter (also known as 'PA'), it covers you for injuries in the event of an accident. It includes, and is not just limited to, road accidents.
Car insurance covers your car, not you - period.
Who can drive your car?
When you get a car insurance policy, the authorised drivers will be defined clearly. The first two authorised drivers will be fully covered, while subsequent drivers will be charged extra on your policy.
The authorised drivers should be the only ones to take your car for a ride. If someone else not named drives your car, hard luck – Your car is not covered.
How much can I claim?
If you look at your insurance policy, you will notice an item called Sum Insured. Typically, it is derived from the car market value that has been determined by Insurance Services Malaysia (ISM). This is basically the maximum amount that you can claim for your car, especially when it has been totaled or stolen. No matter what, your claim will never exceed the Sum Insured for your own vehicle.
The 3rd party, however, would be able to claim as much as a staggering RM3mil from your insurance, depending on what is stated on your policy. The RM3mil is an excerpt taken from Lonpac.
What if I crashed my car into an office, destroying all their computers, tables & chairs?
Photo credit :https://pixabay.com/en/fail-car-crash-accident-damage-1411450/
All too familiar? You have probably seen it in the Hollywood movies like the scenes in Fast & Furious. What happens if you did say, lose control and crash into an office with assets in it? Let’s just throw in an injured or dead man while at it. Albeit this is rare but let’s explore with such extreme cases.
As defined, comprehensive car insurance also covers 3rd parties and it is not necessarily another car. It is all 3rd party losses and damages from the glass that you have obliterated, to the computers, tables, chairs, the damaged tiles, everything!
The insurer can only cover up to a maximum of the sum insured for your car and an almost unlimited for 3rd party losses and damages, including that poor chap who is injured or dead.
Getting tricky: How about a pile-up?
In a more intriguing case, what happens when you jammed your breaks and the car in a pile-up of multiple cars? In such instance, we have to treat it as multiple accidents where one single collision is an accident and another collision is another accident.
The first thing is to recall the chronological events that transpired. The second, recognise who-hit-who to identify who is “at fault”? The third, assess damages. For example;
- Car C rammed into Car B.
- Car C is the car at fault.
- Heavy damages sustained at point of contact. Damages outweighs NCD. Car C choose to claim from insurance.Accident 2
- Car B was pushed forward, hitting Car A slightly.
- Car B is at fault.
- Light damages at point of contact. Cost of repair is cheaper and the loss of NCD. Car B decides to pay out of his pocket and not claim from insurance.Accident 3
- Car D could not break in time, smashing into Car C
- Car D is at fault.
- Heavy damages at point of contact. Damages outweighs NCD. Car D choose to claim from insurance.Summary - D pays C pays B pays A
It is important that all Car A, B, C and D report to the police even if Car B is not claiming from insurance. Otherwise you will be subpoena-ed and fined for not reporting when other cars did report that you were involved in the accident.
In any case, accidents should be avoided, so don’t tailgate, keep a safe distance and drive within speed limits.
Grand theft auto
Up for a meeting and came back to an empty parking lot? As mentioned, comprehensive car insurance covers the LOSS of your vehicle. This means it will be covered in the event that your car is stolen.
I’m a Uber or Grab driver. Am I insured?
Straight up, no! When you use your car for Uber or Grab, you are using it for commercial reasons. You need to get a different type of car insurance called Hired Car Insurance (also known as taxi or commercial car insurance). Comprehensive car insurance is for private use only, not for any commercial purposes.
How about the windscreen? Isn’t it covered already? Why should we add?
Photo credit: http://www.advancedautoglass.com.au/types-of-windscreen-damage/
You may have noticed an additional coverage for windscreen when you renew your insurance. Your friends and family may have even insisted on adding this coverage to the policy. It is common. However, did you know that under the basic comprehensive car insurance, it covers damage to the windscreen too?
Why choose this add-on option then? This is so that you will still be able to maintain your No-claim discount (NCD) if you claim with the add-on windscreen coverage. There is a relatively high chance of the windscreen sustaining damage, as some drivers will attest to - including airborne rocks/gravel, extreme temperature, pressure changes and poor manufacturing.
That is why we feel that it will be a wise move to add-on this coverage; you won't be losing your NCD if it ever comes to having to claim for something that is easily damaged. We'll talk about the estimation for the amount of windscreen coverage in Part 2, so stay tuned!
Eligibility & other factors for comprehensive motor insurance
Principally, your car is eligible for a comprehensive plan if it is 15 years and below. If it is 16 years and above, it is not eligible. This is where the 3rd party car insurance comes in and we’ll be covering it in another story.
Back to comprehensive car insurance. In the first 10 years, comprehensive car insurance do not have any loading or excess. Confused? Alright let us help you.
Loading is the premium top-up you pay on top of your basic premium for cars aged 11 years and above. Why? Because old cars pose a higher risk in breaking down.
Excess on the other hand is the amount you must pay first before the insurer in every claim you make.
A quick search for Insurance Excess on Google can sometimes be vague & technical
For example, if you have an accident, the total repair costs RM1,500 and your excess is RM500, you need to pay RM500 and the insurer will cover the remainder of your repair cost of RM1,000. However not exceeding sum insured once again. Excess is applied typically to cars above 10 years old.
Most, if not all insurers require authorized drivers to have a minimum of 2 years driving experience and/or must be at least 21 years old as such young & somewhat dangerous drivers are considered risky. Excess applies otherwise.
There are ineligibilities for certain high risk vehicles to most insurers. They are risky to insure as they are highly sought after in the black market (thieves love to steal these cars) and/or have a high accident rate. Coined by insurers as Declined Risks, these are the vehicles you may want to avoid buying for all intents and purposes;
- BMW X5 / X6
- Toyota Alphard / Vellfire
- Toyota Hilux / Fortuner / Estima / Landcruiser / Supra/Prado
- Nissan Fairlady / Skyline
That’s all for now. We have covered the basics of car insurance (comprehensive in particular) and we’ll be deep-diving further in future stories. If you have any clarification, any corrections or any contributions to this educational article, please email us at email@example.com.