5 things your car insurance won’t cover

May 9, 2014

So what won’t your car insurance policy cover? Read on.

 

By Chester John

In 2012 alone, Malaysia has seen over 400,000 road accidents, and over 6,000 cases that led to road deaths. You can bet that this number has risen for the statistics in 2013, and will continue to rise through 2014 with more demand for cars. This is reason enough to buy yourself a car insurance plan.
There are three types of motor insurance available in the market, namely:

1. Third party cover
It was a dark and stormy night, and the writer here had foolishly decided to drive his car home after a night out on the town. Next thing he knew, the car skidded at a junction, he screamed like a little girl, and hit a pedestrian. Thankfully, he escaped unhurt – the same cannot be said about the pedestrian, as he had suffered a broken leg.
This is where a third party insurance policy shows its worth – it is a policy that protects you against claims for bodily injuries or even deaths caused to other persons (third party), including any loss or damage to their vehicle or property. This also means that you cannot claim for any damages on your own person or vehicle, with it being the cheapest and most minimal policy you would need to enable you to drive legally.

2. Third party fire and theft cover
Similar to a third party insurance policy, this plan insures you against claims from third parties from bodily injury, death, and loss or damage to their property. Added to that, you will be able to claim reimbursement against accidental damages from fire and theft of your vehicle.

3. Comprehensive cover
This car insurance policy covers all of the above, and then some! In addition to third party protection and fire and theft coverage for you own car, you will get cover for any accidental loss or damage inflicted to your vehicle due to an accident.
It is probably a good idea to buy yourself a comprehensive car insurance plan if you own a relatively expensive car, or for anyone who would want to fully insure their vehicle against any unforeseeable events – a car that has a market value of more than RM30,000 would fit just nicely in this category. In fact, for cars still under a hire purchase from the bank – you will have to take out comprehensive cover.

Here’s a quick summary of the above:

Types of Motor Insurance	Third party bodily injury/ death and loss/ damage to third party property	Loss/ damage to your vehicle due to accidental fire or theft	Loss/ damage to your vehicle due to an accident
Third Party Cover	YES	NO	NO
Third Party, Fire and Theft Cover	YES	YES	NO
Comprehensive Cover	YES	YES	YES

So what won’t your car insurance policy cover?
If you have read the terms and conditions for all three policies carefully, you will realise that some incidents are not covered, even though they are very likely to happen, for example – you would expect your car insurance to cover your death in the event of a serious accident…but does it really?

1. Your own death or bodily injury due to a motor accident
You would expect that your own death would at least be coverage for a modest amount of money; well, stranger things have happened. Your personal accident insurance or medical insurance might have you covered, but not a car insurance plan. Nope, not even the comprehensive cover – that means no hospital stay coverage or funeral benefits (although – you are buying car insurance and not life insurance so…).

2. Liability against claims from your passengers


A passenger who gets injured because of a car accident will usually have an easier case compared to the driver – if the accident involves two cars, one of the drivers is sure to be found negligent and liable for the hurt sustained by the passenger.
However, you will be able to pay additional premium on your motor insurance to include Passenger Liability Extension Cover, in the event that your passengers choose to sue you.

3. Theft of non-factory fitted vehicle accessories e.g. car stereos, leather seats, sports rims etc.
Sure, pimping out your “ride” with custom rims, genuine leather seats, and a full blown sound system might earn you points with your friends, but you may also be drawing a lot of unwanted attention. Make sure in addition to your lavish upgrades, you install additional car security features, such as a powerful GPS tracking system!

4. Consequential loss, depreciation, wear and tear, mechanical or technical breakdown failures or breakages
Cars are not unlike humans – they’re not built to last forever. As vehicle parts wear out with time (excluding parts made out of glass e.g. windshield), the value of your car depreciates along with them – and honestly, a car’s value drops the moment it leaves the showroom!
Betterment, which is the process of repairing old parts of your car that were damaged with new franchise parts, is only applicable when your vehicle has been in an actual accident.

5. Loss/damage arising from an act of nature e.g. flood, landslide
These unforeseen events, along with earthquakes and hurricanes are usually referred to as natural disasters or acts of God, and are not covered in standard car insurance policies. On the other hand, you may pay higher premiums to extend your policy to cover flood, landslide, landslip including adequate cover for your passengers.
Evidently, it is very important that you insure your vehicle appropriately according to the current market value for one that is used. This is to avoid under-insurance that will result in only partial compensations on claims, or worse still over-insurance, where you simply waste money to insure a car above its market value, while the maximum you can claim is at the market value.
This was brought you by Chester John from RinggitPlus.com. RinggitPlus compares credit cards, personal loans and home loans to help Malaysians get more for their money.