Tips on buying the right motor insurance policy

IN the event of a minor road accident, the first thing drivers tend to do is to get out of their cars and start playing the ‘blame game’. It doesn’t matter if the accident was clearly caused by one party, everyone involved will insist that they are free of blame for fear of losing their no-claim-discount (NCD). 

But there are more honest and less stressful ways of handling an accident, and the first thing to do is to be an informed driver.  

While it is not possible to diminish the damages to your vehicle once the accident has occurred, it is possible to curtail the damage to your finances. It all depends on the motor insurance policy that was purchased. 

Unfortunately, many drivers do not take the time to understand their policy or the related jargon such as “average clause” and “disclosure” until they are frantically trying to make a claim after an accident.  

Drivers should bear in mind that there are a number of details that should be taken into account when applying for a motor insurance policy. 

Firstly, as soon as a car is purchased the owner must buy an insurance cover. If a used car is purchased, the new owner needs to know that the cover of the previous owner is null and void. This is true even if legal ownership transfer has not yet occurred at the Road Transport Department (RTD).  

The insured value – or sum insured – depends on the market value of a vehicle. Under-insurance or over-insurance can occur when this value is not determined properly.  

If the sum insured is less than the market value (under-insurance) the owner will only be partially compensated. If the sum insured is higher (over-insurance) the insurance company will only pay out the market value.  

The average clause comes into play when a damaged car has been under-insured. The owner’s insurance claim can sometimes be drastically reduced because the claim will be reduced proportionately to the amount that is uninsured. 

Owners who enjoy tinkering with their car engines and modifying the power or performance need to disclose this information to the insurance company. Failure to provide material facts about the car, including previous accidents, can result in the insurance company refusing any claims made. If this happens, the owner will be liable.  

There is a ‘reward’ for the driver who has somehow managed to maintain an accident-free car. This is known as the no-claim-discount (NCD).  

The premium for the insurance will be reduced if no claim is made against the policy during the preceding 12 months. NCD entitlements depend on the class of the vehicle and the number of years of continuous driving experience without any claims made against the policy. 

Premium payments have been modernised since the advent of the JPJ eINSURANS system, which came into effect in January this year. Physical cover notes are now a thing of the past and the insurance company provides all information to the RTD online. However, policy details in the form of a statement will be issued to the vehicle owner once the policy is purchased through cash, credit card or cheque.  

Premiums must be paid to an agent representing the insurance company or directly to the company. The insurance company is required to issue the policy within one month and vehicle owners are advised to contact the company if they have not received their policy after 30 days.  

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