After motor detariffication, insurance companies in Malaysia are allowed to set their own insurance prices. If you are considered a safe driver, your car insurance will be massively cheaper. If you are considered a dangerous driver, your car insurance will be more expensive.
In Malaysia, car and motorcycle insurances are regulated by Bank Negara. Motor insurance is Tariffed today. This means that Bank Negara has fixed how much motor insurance should cost for you. You can find the cost of your insurance on Insurance Info. It is free. Insurance companies follow a simple rule to calculate the price based on 4 key factors that are:
>When you find out your price on Insurance Info, you might notice that the price shown is different from what you pay. This is because one or more of the 4 key factors are different. If your insurance price is lower, be happy and know that you pay a good price. If you pay more, you want to continue reading and find out if you can save money. You can save up to 15% today and up to 50%, when motor detariffication comes.
Although the price is regulated, in reality, when you go out and actually buy insurance, you notice that insurance companies charge a different price. Most of the time, the price of insurance is different, because of the key factor number 1. The value of your car, also called Sum Insured is different. The Sum Insured is very simple, the higher the value of your car, the more your insurance cost. If you own a car that costs RM 50,000 and you set the sum insured at RM 40,000, you pay a lower insurance price. You can save money and many people do that to keep the cost low, but be careful, when your car is damaged or stolen, you risk that the insurance company refuses to pay, because you have wrongly stated your car value.
Another common difference in price is because of factor 2: Extras & Loading. Extras are additional insurance covers that you buy like Agreed Value, Personal Accident or Roadside assistance service like Towing. Those Extra Services will increase the insurance price. Insurance companies like to sell those, because they make them good money. Loadings are small price increases that insurance companies are allowed to make. Each insurance company can decide on their own if to “Load” or not. Factors to load are things like Age of Vehicle and Insured Driver Age. In many cases, insurance companies will “Load” the price, if the car is older than 10 years. Also drivers younger than 25 years will see price increase of up to 15%. It is worthwhile to compare between companies.
When motor detariffication comes to effect, insurance companies will add new factors that will determine the cost of your insurance. Currently under considerations are factors like.
Now with the above factors insurance companies will have more freedom to calculate the price of insurance. It now depends less on the car and more on the driver that will drive the car.
We from iBanding believe that the detariffication is VERY VERY GOOD. It means that “Good” and “Safe” drivers will pay cheaper insurance and “Dangerous” and “Un-safe” drivers will pay higher car insurance. This price change will make people drive more careful and make Malaysia’s roads over time safer !!! You don’t believe it? It happened in many other countries like Singapore and Malaysia is one of the last countries to detariff.
It is not clear when and how exactly it will happen, but Bank Negara’s goal is to start the detariffication in mid-2016.
Each insurance company will have their own criteria on who is a “Good” and “Safe” driver. When it comes to renewal, some insurance companies will think that you are a “Dangerous” and Un-safe” driver and charge you a higher prices. When Motor Detariffication comes to Malaysia, you start should start comparing prices between insurance companies to find out who the cheapest is for you. But cheapest does not always mean it is the best insurance for you. Take part in our free survey to find out which insurance company provides the best service.
If you want to know more about detariffication in Malaysia, here are some useful online links:
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