All Parties Condemn Actions by Motor Insurance Companies

The Barisan Nasional, which consists of various political parties such as UMNO, MCA, MIC and Gerakan and the opposition which is made up of P.K.R, D.A.P. and PAS, recently collaborated with each other in Parliament. For the first time in the history of the Malaysian Parliament, the above two parties heavily criticized the vehicle insurance scheme currently offered to the Malaysian motoring public.

Datuk Mohamed Aziz (B.N. Sri Gading) says he sees no sense why insurance companies should charge such exorbitant rates for third party insurance for vehicles which are more than 10 years old.

Owners of old vehicles, who are made up of mostly village folks and pensioners, are badly affected by the insurance companies’ refusal to cover old vehicles.

A few years ago, third party insurance was within the ambit of RM100 to RM150 only. Believe it or not, this year, 2011, my wife’s Proton Iswara, had to fork out some RM380 for a RM14,000 first party policy. The above amount was arrived at even after a 55% N.C.B. deduction was made. For your information, the above vehicle is a 1993 model. Its value in the market today, is no more than RM2,000 to RM3,000.

Insurance companies were only willing to insure the above vehicle for a sum of RM14,000 first party insurance coverage. What I would like to inquire is, if in any eventuality, the said vehicle is stolen or lost, are the insurance companies willing to compensate or reimburse the owner an insured sum of RM14,000?

According to legal sources, a vehicle which is legally insured for a sum of RM14,000 should infact be paid the sum above. However, whilst speaking to my friend and one of Klang town’s top insurance agents, Mr. Goh of Goh Brothers Insurance agency, I was told by Mr. Goh himself that there is a clause in the motor insurance agreement which specially reiterates that insurance company can replace a RM14,000 vehicle insured, with a similar make or model of the vehicle insured.

Should owners refuse to accept the insurance company’s offer then the only alternative is for one to engage a lawyer to challenge the insurance company’s offer. Whatever the consequences, it would be a tremendous hassle indeed.

The third party insurance problem has come to a stage whereby the government is unable to come up with a favourable decision to aid the poor third party vehicle owners.

A few months ago, the government, with Bank Negara’s assistance, announced that anew insurance company which is to be made up of the government and private insurance companies is to be set up. It was also made known the “premiums” charged by the above new company will be acceptable to all motorists.

It now looks as if the above proposed company has erupted up in smoke, as far as third party motorists are concerned.

Datuk Bung Moktar Razin (B.N. Kinabatangan) implored that Parliament should monitor the operations of insurance companies which he claims would happily charge consumers for the slightest of things. Insurance companies had not made it easy for policy holders when they had to make damage claims.

D.A.P’s Bandar Kuching Parliamentarian, Chong Chen Jen, said policy holders were “forced” to purchase personal accident insurance before they could buy third party policy for their old vehicles. Otherwise, the companies will not allow them to purchase the required insurance.

If previously, they were supposed to pay just RM70 to RM80, now they will have to fork out more than RM200. Mr. Chong asks, “How could Bank Negara be so blind, as not to notice what the insurance companies are doing.”

The problem of motor insurance does not involve third party insurance only. I have been told that insurance coverage for other vehicles such as school buses, small lorries and even 3 ton lorries, which are usually used to ferry goods, face similar problems such as that faced by vehicles that are over 10 years old.

According to a Mr. Goh, the manager of Goh Brothers Insurance Agency in Klang, his business investment performance has been badly affected. Mr. Goh claims he is unable to provide the necessary insurance to his clients. They are now unable to obtain the necessary insurance coverage and this has resulted in business being affected badly.

Looking at the overall situation, it appears that third party insurance coverage for old vehicles which are 10 years and above, will continue to be a major headache to many Malaysian in the coming months and may be even years ahead.

Unless Bank Negara itself and the government as a whole take immediate actions to rectify the dire situation, this problem will continue to be raised by many political parties in the forth coming general election soon. It would, without doubt, be a hot topic of discussion.

By | 2012-09-21T18:16:55+08:00 May 10th, 2011|Auto Insurance|4 Comments

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  1. Zulhilmi May 10, 2011 at 6:30 pm - Reply

    Hi Cikgu Yap,

    My name is Zul and I have few questions regarding driving license. Actually, I already got my L license for car in 2007 but for some circumstances I failed to finish my JPJ test until the L expired in 2009.

    If there any way to reinstate my L license so that I no need to start all over again.

    warmest regards,

    • Cikgu Yap May 16, 2011 at 9:16 pm - Reply

      Your L license exempt you from Highway Code for 2 years. If expired, you have to sit for the 5 hour KPP course, then sit for your Highway Code again.

  2. Aliff May 25, 2012 at 3:53 pm - Reply

    the 3rd party insurance is high because of the 3rd part claims that the insurance company need to handle. liability to the 3rd party is costly and long tailed, some cases the insurance company have to cough up a million to the 3rd party for the medical bills that has been incurred, as we know how bad Malaysian driver are, the cost of insurance correlate with the number of accident in Malaysia (and we all know that we are in the top 5 country with the most accident). bank Negara has done a tremendously fine job by forcing a tariff rate for all the motor insurance, without Bank negara’s rule and regulation most Malaysian wont be able to afford motor insurance. remember you are paying not only for your own vehicle’s insurance but the liability that you will bring on the road (3rd parrty property and 3rd party bodily injuries).

    sorry for the long post just wanna explain how things work.

    • Cikgu Yap May 26, 2012 at 10:48 am - Reply

      Really appreciate your feedback.

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