Car Insurance & Road Tax Renewal 101

Written by: GoInsuran

blog.101@2x 1According to the Road Transport Department (RTD) of Malaysia, a total of 3.78 million vehicles throughout the country have yet to renew their Motor Vehicle Licence (LKM) as at 16 November 2021, also known road tax. So, if you’re one of them, this will surely help you out for your yearly road tax and insurance renewals.  

Did you know? If you’re caught driving without a valid road tax, you’ll get a summon, or be required to attend a court hearing! Plus, if an accident were to occur, you’ll not be able to make an insurance claim to cover the repair costs.  

So, don’t risk it, as it’s easy to renew your road tax online, and receive it the next working day (unless during lockdowns, which could then could lead to back log of renewals).  

When there’s road tax, there’s car insurance.  If you didn’t know that, now you do! Car insurance is a necessity and requirement by law in Malaysia when you purchase a vehicle. You cannot renew your road tax without renewing your insurance. The insurance is to protect your wallet, when you’ve to pay to a third party in the event of an accident. It is also compulsory to have at least a third-party plan in Malaysia to be able to renew your annual road tax.   

Factors that affect the amount you pay for road tax and insurance .

Since the implementation of de-tariffication in July 2017, companies offering motor vehicle insurance look into various additional factors to determine your car or motor insurance’s premium. 

Road tax 

Insurance premium 

Engine capacity 

A higher fee is imposed on larger-sized engines. The assumption is that the use of large engines will increase pollution rates.  

Location 

Rates are generally higher in city areas compared to rural areas as city areas has a higher rate of accidents, theft, and vandalism. 

 

Vehicle Type 

Separated into two categories – saloon (sedan, hatchback, coupe, wagon, convertible) and non-saloon (MPV, SUV, pick-up, commercial). 

Age 

Younger and inexperienced drivers will be considered as higher risk, and thus have a higher premium rate.  

Region / Location 

Road tax in East Malaysia is lower than Peninsular Malaysia, to compensate for the differences in road conditions, facilities and infrastructure compared to Peninsular Malaysia. 

Driving record 

Drivers with a safe driving history will typically enjoy lower premium rates.  

Vehicle Usage 

Vehicles registered as private-owned by an individual cost less than vehicles registered under company-owned. 

Vehicle Type 

Vehicles classified as intermediate-performance, high-performance, rear-engine models and sports vehicles have a higher premium rate as the cost of repair will be higher, in the event of an accident. 

 

Types of coverage 

The more coverage and benefits, the higher the premium rates. Usually, if the insurance policy covers you and the third-party, it will cost more. 

 Main types of car insurance available in Malaysia 

Before you decide on an insurance for your car or motorbike, remember to get insurance quotes first. Get insurance quotes à Compare prices à Purchase car or motor insurance 

  • Third-party 

Third-party coverage is the cheapest and most basic insurance. It provides minimal coverage in the event of an accident such as injuries, deaths or damages to the car. This insurance coverage doesn’t protect you. Instead, it’ll only protect the third-party involved in the accident. You’ll not be able to claim for any damages to your car, but you can claim for compensation needed to be made to the third- party. 

  •  Third-party, fire, and theft 

This covers any claims made against you by a third-party in the event an accident results in bodily injuries, death, property loss, or damage, caused by your vehicle. Additionally, the insurance policy provides extra coverage on any damages from a fire, or theft of your vehicle. 

  •  Comprehensive car insurance 

This has a wider protection coverage, which comprises third-party, fire, theft, and your vehicle. However, not every car can be covered by this insurance as it depends on the car’s age. 

Do note that the packages listed above do not provide protection for any injury or death that happened to you (the driver or passenger of the policyholder). That would be under personal accident insurance, which provides coverage for you if you face any injuries or death. 

 

Third-Party Coverage 

Third-Party Fire and Theft Coverage 

Comprehensive Coverage 

Third-Party Claims / Liabilities 

Injury 

Y 

Y

Y

Death 

Y

Y

Y

Damage to Third-Party Property 

Y

Y

Y

Lost / Damage to Your Vehicle 

Fire 

x 

Y

Y

Theft 

x 

Y

Y

Accident 

x 

x 

Y

Death / Injury 

Passengers 

x 

x 

x 

Self / Owner 

x 

x 

x 

 Add-on covers 

Any claims of property damage, physical injury, death, and so on, made by a third-party will be covered by your car insurance policy. Depending on your preference, you can include add-ons to your package such as special perils coverage and more.  

 If you want to insure your car or motor more than the standard policy, these are a few add-ons available.  

  • Additional drivers, e.g. third and fourth driver 
  • Windscreen / windshield insurance 
  • Special peril (situations such as floods, landslides, storms, and more). 
  • SRCC (strike, riot, and civil commotion) 
  • Car accessories 
  • Liability claim from your passengers in the event of a car accident 
  • Compensation for the time your car is being repaired in the workshop 
  • Complimentary car usage for as many times as you need, in the event of theft or accident 

However, not every insurance package will allow every one of these add-ons in coverage. If you require any add-on coverage, make sure that you choose a car or motor insurance policy that provides the ones that would fit your need. 

Is there a discount? 

Yes, if you do not make any insurance claims during the insured period. It’s known as No Claim Discount (NCD). Your NCD discount goes up, however, once you make a claim, it will start from 0% again. After a year of paying your premium to full, you start building your NCD again.  

 NCD rates for private-owned car 

Year 

NCD 

1 

0% 

2 

25% 

3 

30% 

4 

38.33% 

5 

45% 

6 

55 % (max) 

If you have earned 55% NCD and made a claim during that year, your NCD rate will go back to 0% the following year. 

What is the sum insured? 

This refers to the maximum amount a car can be insured according to its current value. This can be determined by two different values. 

Agreed value  

Amount which has been agreed both by the car owner and insurer based on the car’s model and year. If you file a total loss or theft claim, the insurer will compensate you in full according to the sum insured you picked, regardless of the current market value. 

E.g. If the amount insured is RM50,000 and an accident occurred, the car insurance company will give full compensation of RM50,000. 

Market value  

The insurer will determine your car’s worth based on its current market value at any point in time. In the event you submit a claim for total loss or theft, the insurer will assess your claims based on the current market value of your vehicle at the time of loss. 

 E.g. If the amount insured is RM50,000, but the market value due to an accident drops it to RM40,000, the car insurance company will compensate based on the market value of RM40,000. 

The value of your car depreciates every year. Thus, the sum insured will also decrease accordingly. By choosing the appropriate level of coverage amount, you can avoid over-insuring or under-insuring your car.  

Where to e-renew car insurance and get FREE road tax delivery in Malaysia? 

GoInsuran.com  – This is one of the most popular, affordable and smartest platform for car insurance and get free road tax delivery. 

Insurance provider’s website or app – for example, in this website, you can get live car insurance quotes from 13 insurers, renew in as fast as 3 minutes, and get your road tax delivered to you free. This way, you know that you’re getting the best car insurance for you. 

Prefer not to e-renew? Here are 2 options.  

  1. At the post office  
  1. Road Transport Department (JPJ) offices or branches 

Tip! Remember to bring the required documents and enough cash as some branches do not accept payment by debit/credit cards.  

 Related sites: