How Much Car Insurance Do I Need Malaysian People?

Too little, and you’re financially vulnerable. Too much, and you’ll overpay. So here’s a guide to how much car insurance you need.

Choosing the right amount of car insurance can be tricky. And while your state probably requires a minimal amount of auto insurance coverage, you might wonder if it’s enough after an accident.

There’s no quick or easy answer. While you’re obligated to get the minimum amount of car insurance required to drive legally in Malaysia, how much you purchase beyond that depends on your own financial situation. So how much car insurance do you need? And are there any optional coverage types that are recommended? Here’s what to know.

What car insurance coverage do I need?

You need the minimum amount of car insurance required in Malaysia. All drivers in Malaysia are required to have car insurance.

The main component of car insurance — liability coverage — doesn’t pay you if you cause a crash. Instead, it pays others for injuries, deaths, and property damage you cause, but only up to your policy’s limits. Liability limits are often listed in a format such as “25/50/15.” Using that example of 25/50/15, your insurer would pay RM25,000 per person and RM50,000 per wreck for injuries you’re responsible for, and up to RM15,000 for property damage you cause.

Minimum bodily injury limits can be as low as RM15,000 in Malaysia. However, a serious wreck can easily result in medical bills much higher than that. The average cost of a crash resulting in non-disabling injuries was more than RM40,000 in 2021, according to the National Safety Council. If you don’t have enough liability coverage to pay for the other driver’s bills, you’ll have to pay out of pocket — or possibly face legal action.

How much car insurance do I need?

So how do you know when you’ve bought enough car insurance? Start by considering your net worth and how much you drive when determining your auto policy’s liability limits. If you don’t have enough to cover injuries or property damage you cause, you could face a lawsuit totaling tens of thousands of ringgit.

“Net worth” may come off as something extravagant, but in the case of insurance, it’s an important number for you to keep in mind. After all, the most important thing about car insurance is having the proper coverage limits for your financial situation.

Here’s an example: If you hit another car and injure the driver and passenger, your liability limits should be high enough to pay to fix their car and cover their medical bills. If the driver’s vehicle is worth RM20,000 and the medical bills hit RM40,000 per person, you’re responsible for paying RM100,000. And if you don’t have enough insurance to cover all of that, then the injured parties could sue you to get the money they need to deal with problems that you caused.

It’s important to remember that car insurance is there to protect your financial security. Getting insurance equal to your net worth means your policy should be able to cover the full cost of an accident without putting your home and other assets at risk.

Most insurers limit the amount of liability coverage you can have, and that limit may vary. But if you max out your liability insurance and still want more, you can purchase more coverage with an umbrella insurance policy. These policies add additional liability coverage for both your car and home, often in RM1 million increments.

If you don’t have any assets to protect besides your car, you’re probably OK purchasing minimal liability coverage.

Full coverage is (usually) a smart choice

Liability coverage is valuable in dealing with another driver’s bills if you caused an accident. But what about your own car repairs? What if your vehicle is totaled in a crash and you need RM20,000 to replace it? If those are questions you want answers to, full coverage car insurance may be worthwhile.

The term “full coverage” typically describes an auto insurance policy with liability coverage plus collision and comprehensive coverage. These two coverage types pay for damage to your own vehicle, regardless of who is at fault. More specifically, collision coverage pays out when your car crashes with another one. Comprehensive coverage pays for damage to your car from situations outside your control, like vandalism, theft, or a deer collision.

If you do buy collision and comprehensive coverage, pay attention to the deductible, which is how much you pay out of pocket before your insurance coverage begins paying for a claim. Collision and comprehensive deductibles tend to range from RM250 to RM1,000 but can go higher, so choose an amount you could afford to pay in a jam.

Optional coverage types may be worth it

With so many types of car insurance coverage available, it can be difficult to figure out what you need and which coverages you should skip. Each driver’s situation is different, but one of the more common car insurance coverage types is uninsured motorist coverage.

About 1 in 8 drivers on the road don’t have car insurance, according to 2019 data from the Insurance Research Council. If you’re hit by one of them, you may be out of luck unless you have uninsured motorist coverage. And if you’re hit by a driver who doesn’t have enough insurance to cover your car repairs and medical bills, you’ll want underinsured motorist coverage to help you pay all of those bills.

Insurers offer a variety of other useful coverage types:

• Glass coverage pays to repair car windows if they’re damaged. It’s handy coverage to have if a rock on the road hits your windshield.
• Medical payments coverage will pay for your or your passengers’ injuries after an accident and can be useful to cover health insurance deductibles.
• Roadside assistance will send help your way if you need a tow or jump start, although some companies may charge you out-of-pocket for services in addition to the regular premium.

Finnal Word:

Choosing the right amount of car insurance is crucial for your financial security. While Malaysian law mandates a minimum level of coverage, it may not be sufficient to protect you in the event of a serious accident. Consider your net worth and driving habits when determining your coverage limits. It’s important to ensure that your insurance policy can cover the costs of any potential accidents without putting your assets at risk. Additionally, opting for optional coverage types such as uninsured motorist coverage, glass coverage, medical payments coverage, and roadside assistance can provide added protection and peace of mind on the road. Ultimately, investing in comprehensive coverage can be a smart choice to safeguard both yourself and your vehicle from unforeseen circumstances.

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