Factors Affecting Premium Rates: What You Must Know

Factors Affecting Premium Rates: What You Must Know

With the detariffication of motor insurance back in 2017, each individual’s premium rate may no longer be the same, as insurance companies are now using the risk-based pricing method to calculate your premium. Find out the factors affecting your motor insurance premium.   Before 2017, Bank Negara Malaysia (BNM) was the one responsible for controlling the price of motor insurance premium. Insurance companies followed a tariff structure, where the factors affecting one’s premium include the following:

  • The vehicle’s current market value
  • The engine capacity (cc) of the vehicle
  • The vehicle’s age (vehicles older than 10 years old had higher premium rates)
  • Add-ons, for example, Personal Accident

Minor differences in pricing

Due to the same calculation method used across insurance companies, the premium rates were pretty much similar regardless of the company you chose to purchase insurance from. Even if there was a small difference in pricing, it could be because of:

  • Different add-ons (product or service) included in the policy
  • Loading conditions (whether a vehicle carries a higher risk)
  • The sum insured (a vehicle’s value may be viewed differently by different insurance companies)

What are the factors affecting premium? 

Post-detariffication, insurance companies are no longer required to follow the tariff structure set by BNM. Instead, premium rates for motor insurance are now based on several risk factors carried by an individual, which include the following:

  • How you use your car

Are you a suburban housewife who drives her car to run errands and fetch her kids to and from school? Chances are your premium rate may be lower as the risks you carry are fewer than those who commute daily to their office via highways, where the risk of road accidents is high.

  • The type of vehicle you drive

Vehicles equipped with intermediate to high-performing rear-engine models as well as sports-type vehicles have higher premium rates. This is because the repair cost is more expensive than average vehicles if an accident occurs.

  • Your age

The younger you are, the less experience you have in driving. This means your premium rate will be higher as you’re perceived to carry more risks, compared to drivers with years of driving experience.

  • Your gender

Female drivers tend to be more careful on the road, so they get to enjoy lower premium rates compared to their male counterparts.

  • Your driving record

If you have no history of getting speeding tickets, being involved in an accident, being slapped with summons because you didn’t follow the rules, or other traffic offences, chances are your premium rate will be lower.

  • Your claims history

Drivers who have a history of making claims indicate that they carry higher risks, which means they’ll get a more expensive premium rate.

  • The add-ons you choose

The more coverage and benefits you picked, the more expensive your premium rates will be. Typically, insurance policies that cover the driver, as well as the third-party, tend to cost more.

  • Where you live

If you live in a high-risk area where vandalism, theft, or accidents are common occurrences, your premium rates will be higher.

 

Simple tips to get affordable premium rates

Now that you know what factors are affecting the premium rates of your motor insurance, you can try to get more affordable rates by following these simple tips:

  • Have a budget in mind

Calculate your monthly expenses. See how much money you can set aside to purchase motor insurance and be able to pay every month.

  • Drive with good manners and keep a clean record

Avoid getting into a car accident by driving carefully and controlling your temper and ego (road rages are so common in Malaysia). Don’t drive too fast if you don’t want to get a speeding ticket. Don’t do any traffic violation to avoid being slapped with hefty fines. These are the simple ways you can keep a clean driving record.

  • Know your vehicle well, inside out

As a vehicle owner, you should already know every little thing about your vehicle. But if you’re not into cars and have little knowledge about things such as the model, make, and year of your vehicle, it’s time you pay more attention as this could help you get more affordable premium rates.

  • Upgrade the security of your vehicle

This is especially important if you live in a high-risk area. Make sure things like auto-lock and alarm are functioning properly. If you could afford it, consider installing a dash-cam for added security, or any other security device.

  • Don’t get add-ons that you don’t need

Some insurance agents may sweet-talk you into getting add-ons that you actually don’t need, so think carefully about what you truly need and don’t need.   Contrary to popular belief, detariffication is actually a good thing for vehicle owners in Malaysia. With the new premium calculation method, consumers can now enjoy lower premium rates, various insurance products tailored to their needs and budget, and overall better customer service.

Myths About Purchasing Motor Insurance, Debunked

Myths About Purchasing Motor Insurance, Debunked

Insurance is one of the essential things in your life that you’ll need. Its biggest benefit is that it could protect you and your loved ones, financially speaking.

It acts as your safety net should something happen to you. If you’re the breadwinner of your household, having insurance is definitely more important than ever.

Myths About Purchasing Motor Insurance, Debunked

Why the myths about purchasing motor insurance aren’t true

Despite insurance being handy in emergencies, many people avoid being insured due to confusion and several misconceptions surrounding insurance. If you are one of them, we’re debunking some myths for you now.

Thanks to the myths surrounding insurance, many people have missed out on the benefits it offers. Hopefully, we can convince you to change your mind about purchasing motor insurance by debunking these myths. Find out the top five myths about purchasing motor insurance and why they are not true: 

 

1. Motor insurance is too expensive.

The amount of your insurance premium depends on what kind of motor insurance you’re getting, the add-ons you opted for, and things like your age and health condition. For motor insurance, insurers will calculate the premium rates based on risk factors such as age, gender (yes, sexism still rules, unfortunately), residence, claim history, and occupation.

If you’re worried about your limited budget and feel like it’s a hassle to look around for the right insurance, you can easily use a comprehensive online marketplace for insurance to seek advice, compare insurance and get free quotes instantly without the trouble of going from place to place. 

 

2. Young and single people with no dependents don’t need insurance.

Life is unpredictable, and not to sound dramatic, but tragedies like accidental death, disability, or critical illnesses could befall anyone regardless of age. At least with the right motor insurance, rest assured that you’ll be protected financially. 

 

3. There’s no need for insurance when the government has already offered healthcare initiatives and subsidies for Malaysians.

Yes, you’re only required to pay RM1 or RM5 if you go to a government clinic or hospital, but there may be other fees involved depending on your situation and health condition. And yes, there are already a few healthcare initiatives by the government like Peka B40but not everyone is eligible. It always helps to have an extra cushion.

 

4. The company’s insurance is sufficient.

Sure, if you plan to work for the same company for the rest of your life. But then again, there’s a possibility of being retrenched. What are you going to do if you lose your job and need proper medical treatment, but it’s expensive, and your life savings are barely enough to cover you and your family?

Without insurance to back you up, you’re literally digging your own grave. Sorry if that sounds morbid, but it’s the truth that everyone should consider taking seriously. Relying solely on your company’s insurance is not sustainable in the long run.

Besides, most companies only provide health/medical coverage. If you commute to your office daily and are often out and about for work, it’s even more critical that you’re backed by motor insurance.

 

5. Your basic motor insurance is enough to cover you.

Also known as the Act cover, this is only a base coverage to correspond with the Road Transport Act 1987. It only involves legal liability for death or bodily injury to a third party (excluding passengers).

Motor insurance is compulsory for vehicle owners, be it a car or a motorbike. However, your basic motor insurance is not sufficient to cover you. Hence, it’s better to get additional coverage. There are three types of motor insurance to choose from, which are:

 

i. Comprehensive coverage

The most recommended coverage as it covers pretty much everything, in the event where there’s damage to your vehicle because of accident, loss or damage to your car due to theft or fire, damage to another party’s property, and injury or death to another party.

Also known as the first party policy, this coverage also offers optional benefits (subject to agreement), for example, Personal Accident and Medical Benefits for driver and/or passengers, windscreen breakage cover, or even coverage for damage to your vehicle caused by natural disasters or civil commotions like riots.

 

ii. Theft and third party fire coverage

Also known as the second party policy, this coverage protects your vehicle from the loss or damage caused by theft or fire, damage to another party’s property, and injury or death to another party.

 

iii. Third-party coverage

Also known as the third party policy, this coverage only covers damage to another party’s property and injury or death to another party.

 

Choosing the right insurance is very important, and finding the right type of insurance can be daunting due to so many options.

When in doubt, simply use online insurance aggregator like Fatberry to sort out the best insurance where you can compare and get free quotes instantly–all in less than 3 minutes!

Car Insurance: 8 Quick Tips to Reduce The Cost

Car Insurance: 8 Quick Tips to Reduce The Cost

If you are a car owner in Malaysia, then you need the best insurance policy available at a competitive price. Reducing the cost of your car insurance is easy if you know how.

8 Quick Tips to Reduce The Cost of Your Car Insurance

8 Quick Tips to Reduce The Cost of Your Car Insurance

Here are the tips to help you reduce your auto insurance premium:

 

1. Keep a Clean Driving Record

As a driver in Malaysia, you have to maintain a perfect driving record to get the best rates. Remember that tickets, accidents, and the violation of traffic will affect your car insurance premiums. Therefore, if you drive safely on the roads and follow the rules, and you will be rewarded with cheaper premiums in the future.

2. Maintain a Good Credit Score

Credit insurance score can be used as a factor when setting your premiums. The insurer calculates your credit score from your credit report. Therefore, you have to regularly check your credit record and ensure errors are corrected to maintain an accurate record.

3. Sign Up for a Blackbox

The black box policy in Malaysia allows insurers to install a system that monitors drivers as they drive and reward those who are careful. This reward comes in the form of cutting premiums substantially. These black boxes are known as telematics, and young drivers are advised to embrace them.

4. Go For a Higher Deductible

If you have an accident and need to make a claim, you will have to pay the deductible amount before your insurance policy covers the rest. If you take out a higher deductible, you can reduce your premium as it reduces the insurance provider’s risk. Therefore, opt for a higher deductible if you can. By so doing, you will save a high per cent without sacrificing reliable coverage.

5. Check Out Your Coverage Options

Consider reducing coverage on older cars. Buying coverage may not be cost-effective when your vehicle’s worth much less than the premium. If your vehicle is undergoing repair or has caused an accident, you can choose rental car coverage in Malaysia or use a family member’s car instead.

6. Accept the Mileage Cap

You could cut up to 10 per cent off your premiums by reducing your driving mileage per year. Miles driven per year is considered a cost component in auto insurance. You earn a discount since your car is not likely to be involved in an accident if it’s rarely driven. Ensure you are honest with the mileage to avoid jeopardising your claim.

7. Choose Your Car Carefully

Premiums usually vary with auto models. Some cars are an insurance trap, for example, the older cars that lack safety features, compared to the new models with standard safety features. Sporty motors will also attract a high premium compared to other models or those with a smaller engine, which also has the added advantage of saving money on fuel.

8. Multiple-Policy Holders

If you maintain more than one kind of policy with an insurance company, then you can get significant savings. If you purchase renters, homeowners, or life insurance, you will get a multiple-policy discount, which reduces your premiums on both policies. You may also get a reduction by insuring more than one vehicle with the same insurance company.

 

Hopefully, these tips are useful to you in choosing your next insurance policy. If you need any assistance in finding the right cover for your vehicle, don’t hesitate to contact us for a competitive quote.

Also, while we’re talking about reducing the costs of our car-related expenses, have you checked out our RM1 Road Tax promotion yet?

In partnership with Visa, you’ll only need to pay RM1 for your road tax when you renew your car insurance and pay with your VISA card. So cheap, right? Don’t miss out on this promo! If your car insurance hasn’t expired yet, don’t worry! Just click CHOPE for your next renewal!

Insurance Based On Life Stages: How To Choose Correctly

Insurance Based On Life Stages: How To Choose Correctly

Choosing the right insurance based on life stages is important to ensure you’re not wasting your money away or losing out on something you truly need.

 

Almost everyone goes through the same stages of life, which looks something like this: school > college/uni > work > get married > start a family > become an empty nester > retire. Of course, not everyone will go through such a path to a T.

However, you live your life, it’s important to have the right insurance that fulfils your needs at that particular point in your life.

With so many different insurance types to choose from, it can get overwhelming, especially for those who are not very familiar with how insurance works and its different terms and policies.

 

Three major insurance categories, each with various different plans

In Malaysia, there are at least three major insurance categories with different plans under each of them. Here’s an example:

  • Health/medical insurance
    Under this category, plans include medical care, surgery and hospitalisation coverage, income insurance (for those who are hospitalised), and critical illness coverage.
  • General insurance
    Plans under this category include personal accident, travel insurance, and motor insurance.
  • Life insurance
    There are two plans to choose from for this category: either opt for term life coverage or whole life coverage.

Consider a few things first…

Not all plans are created equal, even if they’re of the same category. Each has its own unique features, with different payment terms, benefits and policies, which is why you need to choose carefully when you shop around for insurance.

When you’re planning to buy insurance, consider your lifestyle, how much you can afford the premium, and your particular needs (for example, how often you will see your doctor). 

 

Choosing the right insurance based on life stages

So how exactly do you choose the right insurance based on life stages? Let’s have a look at these four major life stages that most people would go through:

 

1. Young, single 20/30-somethings or the career ladder climbers

Striking out on your own can be daunting, but with the right insurance plan, rest assured that at least you’re financially covered should anything happen.

The best time for you to get insurance is when you’ve settled into your job. Assuming you’re just starting out with no dependents or if you’re an ambitious career ladder climbers, these are the types of insurance to consider:

  • Health/medical insurance
    No matter how young and healthy you are, life is unpredictable. Accidents and critical illnesses could happen anytime.

    With health/medical insurance, you will be covered in terms of medical expenses and hospitalisation (normally at private hospitals) or your income if you’re hospitalised.

    Of course, all of this depends on which type of plan you’ve selected. Note that the younger and healthier you are (cheers to the non-smokers!), the cheaper the insurance will be in most cases.

  • Motor insurance
    Motor insurance is compulsory for anyone who owns a vehicle, be it a car or a motorbike. So, if you own a vehicle, you must get motor insurance under the Road Transport Act 1987.

    There are a few types to choose from: comprehensive coverage, theft and third party fire coverage, and third party coverage. Here’s the lowdown on each of them:

i. Comprehensive coverage

The most recommended coverage as it covers pretty much everything, in the event where there’s damage to your vehicle because of accident, loss or damage to your vehicle due to theft or fire, damage to another party’s property, and injury or death to another party.

It also offers optional benefits (subject to agreement), for example, Personal Accident and Medical Benefits for driver and/or passengers, windscreen breakage cover, or coverage for damage to your vehicle caused by natural disasters or civil commotions like riots.

ii. Theft and third-party fire coverage

This kind of coverage protects you in the event of loss or damage to your vehicle caused by theft or fire, damage to another party’s property, and injury or death to another party.

iii. Third-party coverage

This coverage only covers damage to another party’s property and injury or death to another party.

  • Travel insurance

    If you LOVE to travel and are a frequent jet-setter (whether for business or for leisure), you must have travel insurance, especially if you often make overseas trips. 

    In the event of travel-related risks such as lost passport, lost luggage or luggage delay, medical emergencies, flight delays, or cancelled flights, rest assured that you’ll be protected financially.

2. Newly married couples

Married people have more financial responsibilities, so review your insurance plan to cover you and your spouse. For couples without children, consider these two:

  • Home insurance

There are various coverage options for homeowners to choose from, for example, full theft coverage, protection against disasters, and more.

  • Life insurance

If you died or facing a critical illness or permanent disability, your beneficiaries will receive a sum of money. There are two types of life insurance: whole life coverage and term life coverage.

3. Couples starting a family

When you are expecting, things like regular health check-ups, hospitalisation or even surgery could add up. Look for insurance with maternity benefits to lower your expenses.

For medical insurance, some benefits include pregnancy care, child care, and child development disorder care. Once you have your child, it may be wise to revise and upgrade your life insurance.

Additionally, you may opt for education insurance, which normally offers your children coverage until they turn 25. Look for a plan that combines savings, protection and investment elements, and benefits like education bonus payout.

4. Empty nesters and retirees

With the kids all grown up, you may no longer have dependents. Your debts and loans may have finally been paid off too. At this point, unless you’re still working, you may no longer need disability coverage.

Additionally, review all of your current plans and decide whether you still need them or not. You might need to keep some of them to ensure your spouse will be fine financially.

Make sure to choose the right insurance based on life stages. This is to prevent you from wasting your money away or losing out on something you truly need. Also, remember to compare the benefits, terms and policies when insurance shopping.

Simply use a comprehensive online marketplace for insurance to seek advice, compare insurance and get quotes instantly without the trouble of going from place to place.