Differences Between Comprehensive and Third Party Motor Policy Which Everybody Ought To Know
Insurance for motorcars in Malaysia can be classified into Comprehensive and Third Party coverage. Pursuant to Section 90 (1) of the Road Transport Act 1987, each motor vehicle is required to be insured in respect of Third Party Risks coverage before it is allowed to be used. What makes the difference between the two types of coverage? In this article, I will attempt to share with you the differences between the two. As usual, the policy holder and or user of the vehicle will have to comply with the terms and conditions of the policy to be entitled to coverage.
Comprehensive Cover
Coverage is not compulsory under the law. You don’t have to take up comprehensive cover if you don’t want to.
Provides cover against damage to the car. Therefore, if the car is damaged in an accident, the insurer is liable to restore the car to its pre-accident condition. This can be either via repairs, cash in lieu of repairs, total loss basis or reinstate or replacement at the discretion of the insurer.
Provides cover in the event of loss of car. If the car is stolen, the insurer is liable to indemnify you the sum insured or the market value of the car, whichever is the lower.
Provides indemnity against liability to third parties. Therefore, if your car had caused injury to a third party or damage to third party property, your insurer is liable to indemnify you against any legal liability which may ensue.
A higher premium is charged. Due to the coverage afforded, the insurance premium is higher. Calculation of the premium is first based on the sum insured on the car followed by any add-on coverage – eg. against breakage of windscreen and glass, etc.
Excess may be applicable in terms of claims for damage to the car. Excess is the first amount which the insured has to bear in respect of the claim for damage to the car. For instance, if the excess is RM200 and the cost of repair is RM1000, the insured has to bear the first RM200 of the cost of repair whilst the insurer will bear RM800.
Third Party Cover
All cars are required to purchase the minimum Third Party Cover before they are allowed on the road. Thus, this coverage is compulsory.
There is no cover for damage to or loss of the car. You bear your own losses.
Provides indemnity against liability to third parties. Therefore, if your car had caused injury to a third party or damage to third party property, your insurer is liable to indemnify you against any legal liability which may ensue.
A lower and sometimes, minimal premium is charged. However, depending on the age and condition of the car, sometimes loading is applied. Loading can be described as an extra premium payable in view of the increased risk of the thing insured.
Excess is rarely, if ever applied. In fact, I have never come across any Third Party policy which has an Excess clause.
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3 Responses to “Differences Between Comprehensive and Third Party Motor Policy Which Everybody Ought To Know”
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A succint and useful piece of work again. Great work.
I understand ‘comprehensive policy is ‘mandatory’ for vehicles under hire purchase…
Eddie : Thanks. Glad it is of use.
purefaith : I believe it is true. Hire purchase companies will ensure that you insure the vehicle with a comprehensive policy so that their financial interest would be protected in the event of damage or loss to the vehicle under hire purchase.