All Malaysians are very familiar with Non Claims Benefit (NCB) or Non Claims Discount (NCD) that can save up to 55% of the insurance. NCB is earned by driving carefully without accident over the years. But there are more ways to save on your insurance. Here are 3 easy ways you can save.
Way 1: Eliminate your “Loading”
Check your insurance contract. In your insurance contract you will have a line saying something like “Loading %”. If it is not 0, you can save money by switching Insurance companies.
Malaysia is a tariffed market, which means that insurance companies need to charge a minimum amount of money for your insurance. This is why a lot of people think it does not make sense to compare insurance companies, because all charge the same. This is wrong, because only the minimum price is regulated.
Insurance companies are allowed to increase the price (Loading) for special cases like your car age or age of the driver. This “Loading” can be up to 35% of the regular insurance price. Each company has their own rules. Overall however, you can say that the older the car the higher the loading. Drivers between 18-23 years of age are also loaded. So how can you save?
If you have a high loading, ask a few other companies for a price quote. It might turn out that some companies don’t put “Loading” for you. However, this depends on the person and the car you are driving. Give it a try. If you have an agent he can help you find the cheapest insurance. If you are between 18-23 years old, you might want to ask someone older to buy insurance on your behalf. You can save up to 15% by doing so.
Way 2: Reduce your Sum insured
The Sum Insured is one of key factors that determine how much insurance costs for your car. The more expensive the car, the higher the insurance cost. If you have bought your car with a loan, compare the “Sum Insured” with the outstanding amount of your car loan. If it matches you are good. If it is higher than your car loan, you can save up to 20% on your insurance. Many insurance companies have started to increase this amount, so that they can charge you higher.
If you have bought your car fully in cash (Lucky you), you can check on MyCarInfo (https://www.mycarinfo.com.my/MarketValue) the estimated value is of your car. MyCarInfo has been started by Insurance Services Malaysia (ISM) to provide the insurance companies with the current value of cars. You can find more about the service on www.ism.net.my. They are independent and provide this service to the public for free. Look for a company that offers you insurance as close as possible to this value.
Insurance companies increase the sum insured especially on older cars, for example 3 years and older. I hear often that some agents support to increase the sum insured above the value of the car, because if the car is stolen you get more money back and can buy a nicer car.
However, you are the one loosing out, because it is actually a form of gambling. You are paying money (here the higher insurance cost) to have the chance of winning more money (here the car gets stolen and you get paid above the value of the car). Don’t use insurance to gamble. Buy a lottery ticket instead and save on insurance.
Way 3: Go direct or ask for discount
Only 2 out of 10 policies are bought directly from the insurance companies. This means that a lot of people buy insurance through agents or through banks. This reflects the level of comfort that people have on buying insurance. For many Malaysian’s insurance is a complicated topic.
Also, there are a lot of good reasons to buy insurance from an agent. For example, they help you in selecting the right cover, getting the road tax or help you when you have an accident. However, if you do not know your agent or if you have bought your insurance through a car dealer, you can buy direct or find an agent that you can trust will help you.
Especially, when you buy a new car and the car dealer is pushing to buy from them, you just follow along, because you do not want to loose other discounts that you might have gotten. But when it comes to renewal of your insurance policy, find an agent that you can trust or decide to buy direct.
Most car dealers focus only on selling cars. They are not insurance experts and will not help you when it comes to an accident or claim. If you are close to your agent, you can ask for a discount during renewal. The work required to renew is minimal and many are willing to reduce their fees. You should know though that under Malaysian rules (PIAM), agents are not supposed to give you any discount.
As you can see the 3 ways of saving more on your car insurance are pretty straightforward. On average you can save about 10-15% on your insurance, when you follow one way or the other.