Car Insurance Jargon
Why is reading the car insurance policies falls into the last thing you want to do after buying your new car? It all has to do with those complicated jargons and lengthy contract wordings! However, as a smart buyer, you paid for it and you want to know what exactly you have just bought. Here are some of the important clauses to look for on your car insurance, even better to look at before you buy them, so you’ll get what’s most suitable for you at a right price.
Market value Clause
Have you ever heard this from your friends? “I’ve insured my car for RM70k, why is the insurance company paying me only RM65k when my car is stolen? Am I being cheated?” No, you are not, car insurance pay out claims based on the market value (the value your car can be sold for in the market) at the time of the loss, not exactly the amount you have insured for. That is how market value clause does to your policy. To counter that, you will need to have the Agreed Value clause.
Agreed value Clause
Agreed Value is the exact opposite of market value, it basically means that you will be paid in full on the insured value in the event of theft or total loss of your car, simple as that.
Betterment Clause
If your car has aged more than 5 years old you met with an accident and you are claiming your car insurance on the repair, you probably will get a shock to find that you actually need to pay a portion of the repair cost. Why is it so? The logic is simple; your car is, say 6 years old, so as the car parts. Now the workshop is going to replace the damage of your old parts with a brand new part, you are gaining in that sense! So, it is only fair that you pay a portion of the new part replaced. Therefore, look again on your policy for the betterment clause and see whether there’s a plan that gives you a waiver of this clause for up to an older age of your vehicle before you buy. A general guideline of betterment is as below.
Excess
Excess is the first loss that you have to bear yourself, yes yourself in the event of a claim even you have insured your car. Consider a car that is insured for RM 70,000, there is an accident and the repair cost comes up to a total of RM 7,000. If there is an excess of RM 500 on your policy, insurance will pay only RM 6,500 for it and you will have to bear the RM 500 of the first loss on your own. If you think car insurances are the same, think again!
Loading
Now if you tell me car insurances are priced equally due to the “tariff”, why are two people of same car bought in the same year charged at a different premium? It’s because of the loading, insurance companies may load you a higher premium on top of the tariff if they deem your risk to be higher than the others. Shop around, different insurance companies have different guidelines and trust me, you will see a difference in the premium once you compared a few.
Market value Clause
Have you ever heard this from your friends? “I’ve insured my car for RM70k, why is the insurance company paying me only RM65k when my car is stolen? Am I being cheated?” No, you are not, car insurance pay out claims based on the market value (the value your car can be sold for in the market) at the time of the loss, not exactly the amount you have insured for. That is how market value clause does to your policy. To counter that, you will need to have the Agreed Value clause.
Agreed value Clause
Agreed Value is the exact opposite of market value, it basically means that you will be paid in full on the insured value in the event of theft or total loss of your car, simple as that.
Betterment Clause
If your car has aged more than 5 years old you met with an accident and you are claiming your car insurance on the repair, you probably will get a shock to find that you actually need to pay a portion of the repair cost. Why is it so? The logic is simple; your car is, say 6 years old, so as the car parts. Now the workshop is going to replace the damage of your old parts with a brand new part, you are gaining in that sense! So, it is only fair that you pay a portion of the new part replaced. Therefore, look again on your policy for the betterment clause and see whether there’s a plan that gives you a waiver of this clause for up to an older age of your vehicle before you buy. A general guideline of betterment is as below.
Excess
Excess is the first loss that you have to bear yourself, yes yourself in the event of a claim even you have insured your car. Consider a car that is insured for RM 70,000, there is an accident and the repair cost comes up to a total of RM 7,000. If there is an excess of RM 500 on your policy, insurance will pay only RM 6,500 for it and you will have to bear the RM 500 of the first loss on your own. If you think car insurances are the same, think again!
Loading
Now if you tell me car insurances are priced equally due to the “tariff”, why are two people of same car bought in the same year charged at a different premium? It’s because of the loading, insurance companies may load you a higher premium on top of the tariff if they deem your risk to be higher than the others. Shop around, different insurance companies have different guidelines and trust me, you will see a difference in the premium once you compared a few.