In case you are unaware, it is a mandatory requirement for all vehicles have “insurance” coverage before the authorities, that is the Road Transport Department or Jabatan Pengangkutan Jalan (JPJ) issues road taxes to vehicles.
New vehicles are normally covered by 1st party insurance, which is rather costly. Amongst others, the above policy protects vehicles against theft and damages sustained.
There is however something else which many motorists might possibly not know about insurance policies or coverage for vehicles.
Besides “1st party insurance” for new vehicles, motorcycles are also subjected to seek mandatory insurance coverage before their road taxes are issued. Previously, insurance coverage for motorcycles were for “3rd party”, “all riders policy” and “1st party”.
However, today the insurance policy for motorcycles has changed. It is my understanding that only 1st party insurance coverage for motorcycles is available in the market today. Therefore, irregardless of whether a motorcycle owner likes it or not, he or she has no alternative but to secure a 1st party insurance coverage if they desire to obtain their vehicle’s road taxes.
Insurance coverage for vehicles, be it cars or motorcycles, lorries, trailers, buses and others, does not only involve such things as 1st party and 3rd party matters. Vehicle owners infact have to consider other aspects of insurance coverage for their vehicles such as:
i. Passenger liability
ii. Windscreen and glass coverage as well.
Extra payment therefore has to be made for the above coverage. All in all, it is indeed a costly affair eventually, if you intend to drive a vehicle.
Then there is a question which is currently being experienced by drivers today. Those who own vehicles which are more than 10 years old or more face another dilemma. The above problem has infact persisted for many, many years now. It has always been difficult to obtain “insurance” coverage for such cars.
Before proceeding any further, I like to explain to its readers, that old vehicles are categorized as being “displaced vehicles” or “high risks vehicles”. Such vehicles are in reality not accorded “insurance coverage” by most major insurance companies in Malaysia today.
In short, old vehicles which are over 10 years old or more, are therefore considered as “nobody’s child”, as no insurance company would like to insure them.
As insurance coverage for a vehicle is a “mandatory” requisite prior to a vehicle’s road tax being issued by the authorities, Bank Negara, which is the governing body for all things pertaining to insurance matters in this country, had no choice but to set up a Malaysian Motor Insurance Pool or MMIP to cater for 3rd party insurance for old cars.
The MMIP of which most major insurance companies are members of, were mostly sold at all major post offices throughout the whole country. It has been reported that the above pool has acquired large financial losses since its inception a few years ago. As a result, additional premiums had to be loaded on consumers.
It was a difficult attempt trying to secure insurance nevertheless, inspite of the presence of MMIP in the market.
As old vehicles owners discovered, inspite of the authorities (in this case, Bank Negara), repeatedly advising “displaced vehicles” or “high risk” owners to get MMIP’s assistance should they face any problems attempting to get 3rd party insurance coverage, infact it was “easier said than done”, so to say.
Numerous obstacles and hindrances were faced by owners of old vehicles when attempting to secure insurance coverage. There were numerous yardsticks which owners of old vehicles had to face before they could obtain 3rd party insurance coverage.
This has finally led Bank Negara recently to issue a directive on 3rd party insurance under what is called its “New Motor Cover Framework”. Following Bank Negara’s latest announcement, owners of old vehicles such as cars and motorcycles were advised that they were now able to get insurance coverage without having to pay a loading of between 200% to 300%.
But a shock announcement two days later, to be exact, on the 7th of May, 2011, insurance companies dropped another “bombshell” on insurers when they reiterated that “normal loading up to 150% were still applicable”.
It seems all motor vehicles, regardless of their age, will be charged the normal market premium including “permissible” loading of up to 150% even thought they are not deemed as “high risks” or “displaced vehicles”.
What I would like to enquire is, why was this fact not made public or announced when Bank Negara’s “New Motor Cover Framework” was made known earlier? Or was it meant to soften the impact of the surprise announcement?
Announcing the imposition of 150% loading on all vehicles irregardless of age, tantamount to not letting the public know the real truth.
A 3rd party insurance for a 1300c.c. vehicle, currently is charged premiums of RM72.00. A 150% permitted loading will amount to RM72+RM72+RM36, arriving at a grand total of RM200. If a vehicle owner has a 55% NCB, then the owner has to fork out a sum of approximately RM90 or so far his 3rd party policy insurance.
Compared to the current loading of 200%-300%, it represents a huge deduction in 3rd party insurance cost which owners of old vehicles of more than 10 years or more has to pay, nevertheless.
At the point of writing this article, the situation regarding 3rd party insurance policies is still unclear. The public has therefore to hold on for another few more months to know the real situation. Be braced for more surprising revelations to be made in the meantime.