One of the largest insurance sector and coverage is Motor Insurance. This is due to the fact that Motor Insurance is mandatory for all vehicles using Malaysian public roads under the Road Transport Act 1987.
TYPES OF MOTOR INSURANCE COVER
When you buy a motor vehicle, you need to buy a motor insurance policy for use of the vehicle on the road. There are, however, many types of motor insurance policies available. The common types are:-
This is the minimum cover corresponding to the requirements of the Road Transport Act 1987. The cover required is in respect of legal liability for death or bodily injury to third party (excluding passengers). This Policy is hardly ever written by Insurers.
Third Party cover
This policy insures you against claims for bodily injuries or deaths caused to other persons (known as the third party), as well as loss or damage to third party property caused by your vehicle.
This policy provides the widest coverage, i.e. third party bodily injury and death, third party property loss or damage and loss or damage to your own vehicle due to accidental fire, theft or an accident.
TYPES OF MOTOR INSURANCE COVER
The Sum Insured of your vehicle is an estimated value for charging your insurance premium however it is also the maximum amount for which your vehicle is insured for. The basis of assessing the true worth of your vehicle is its market value at the time of a loss. The market value must be within the Sum Insured. If it is not, you will be considered your own Insurer for the difference.
Some Insurers offer Agreed Value Policies. Under this term, the market value is considered equal to the Agreed Value of the sum insured.
Some of the information more specific to Motorcycle Policy is highlighted below to clarify and assist in its better understanding.
1.HOW MUCH SHOULD I INSURE MY MOTORCYCLE?
It is essential that your motorcycle is adequately insured as it will affect the amount you can claim in the event of loss/damage. The Sum Insured should always be based on the market value of the motorcycle at the time of applying for the insurance policy. For a new motorcycle, its market value will be its purchase price. However, there may be some confusion as to what constitutes the purchase price. Essentially, we need to differentiate between the purchase price of the motorcycle and the ultimate “on-the-road” price paid by the buyer. Generally, “on-the-road” price includes, on top of the cost of the motorcycle, other charges such as vehicle registration fee, road tax, insurance premium, legal, stamp duty and handling fees for financing, etc. As can be seen, the other charges are not directly related to the cost of the motorcycle. Only the actual cost of the motorcycle, i.e. the purchase price directly related to the motorcycle should be used as the basis to determine the sum insured.
2.HOW MUCH SHOULD I INSURE MY MOTORCYCLE?
Insurance premium should be paid in the name of the insurance company.
You should always insist on a receipt for the premium paid right away.
You should also at the same time be given the basic details of the insurance you purchased in the form of a confirmation of cover slip and it is your responsibility to verify that the details of insurance are correct.
You should also receive your insurance policy contract within one month. Please read the policy carefully. If you have any queries or doubts, please seek clarification from the agent or insurer immediately.
3. WHAT IS THE DIFFERENCE BETWEEN A SINGLE RIDER AND AN ALL RIDERS MOTORCYCLE POLICY?
A “Single Rider” Motorcycle Policy allows only the insured or a named person to ride the motorcycle, whereas an “All Riders” Motorcycle Policy allows any other persons who is authorized by the insured, in addition to the insured, to ride the motorcycle. In view of the extended coverage, there is a 50% additional premium to the “All Riders” Motorcycle Policy. There is always the contention by the policyholders that they can control who uses the motorcycle and, therefore, should not be required to buy what is perceived to be the more expensive “All Riders” cover. However, we can all acknowledge that, in reality it is not always possible or practicable to control the use of a motorcycle. In fact, many a time when an accident occurs, it was invariably someone else other than the insured or named person who is riding the motorcycle. Under such circumstances, a “Single Rider” Motorcycle Policy will not pay for the loss.
When that happens, it may be argued that, that is a risk taken by the policyholder who chooses not to take up an “All Riders” Motorcycle Policy. But we need to bear in mind that the interests of others must be taken into consideration such as members of the public who may end up not being compensated for damages arising from the fault of the unauthorized riders or that of the financier of the motorcycle in case of theft or total loss of the motorcycle concerned. It is, therefore, always strongly recommended by insurers that their customers take up an “All Riders” Motorcycle Policy.
4.WHY DID MY INSURER PAY MY CLAIM TO THE CREDIT/LEASING/HIRE PURCHASE COMPANY WHEN THE PREMIUM IS PAID BY ME (THE INSURED)?
We need to realize first of all that before any financier extends a loan to purchase a motorcycle, he will ensure, amongst other things, that he has some form of guarantee or collateral to protect his interests. As such when a credit/leasing/hire purchase company, who may also be the motorcycle dealer who sold the motorcycle to the policyholder, grants financing for the motorcycle, he will demand certain financial protection. This includes the benefits that may be derived from the insurance policy, although it is paid for by the policyholder, In fact, the credit/leasing/hire purchase company has the right under the financing agreement to have their name endorsed in the motorcycle policy as owner of the motorcycle.
As such, under the Motorcycle Policy, the credit/leasing/hire purchase company, as the owner of the motorcycle has first right to compensation by the insurance company for loss (that is not made good by repair, reinstatement or replacement) to the insured motorcycle.
Source : www.piam.com.my