8 Car Insurance Renewal Myths You Need to Know Before Buying One

For most car owners, car insurance coverage is crucial as it provides financial security in the case of an accident or other covered incident. When it comes to vehicle insurance renewal, it can be challenging to distinguish fact from fiction due to the abundance of information accessible.

In this article, we will dispel some of the most widespread misconceptions regarding car insurance renewal and arm you with the knowledge you need to choose your protection wisely. If you're looking to purchase insurance for the first time or are just looking to renew your current policy, it's crucial to have all the information you need.

Myth #1 The best premium rate is always guaranteed when you renew your car insurance with the same car insurance company

This is not always the case because insurance companies regularly adjust their customers' risk profiles, premium prices, and the number of claims made. Another funny misconception is that one’s car color will impact the rate of the insurance policy, which is not the case. Hence, sometimes your car insurance premium may increase based on those factors.

Insurance companies consider many factors when setting premium pricing. The detariffication of car insurance introduced in 2017 has allowed insurers the flexibility to charge premiums based on the customer’s risk profile, factoring in variables such as gender, age, usage of the car, claims experience, vehicle model, occupation, etc., but never your vehicle color.

While this also implies that there may be differentiated rates for the same risk profile, you will get to enjoy a wider choice of plans and add-on covers at a better value. But the rule of thumb is ― the lower risks you carry, the lower premium rates you will enjoy. So, be sure to drive safely on the road to enjoy lower rates!

Myth #2 Online renewal is always cheaper

Well, this is true most of the time as insurance companies in Malaysia are required to offer premium rebates when customers buy car insurance directly from them, as regulated by the Malaysian government. Although this can be convenient and cost saving, it is important to compare rates from other car insurance providers like your insurance agent or other affiliated insurance partners to find the best deal for you.

Myth #3 Third-party insurance is enough

While third-party insurance is mandatory, it only covers damages you cause to others, not to your own vehicle. Comprehensive car insurance on the other hand provides a wider range of coverage including covering damages to your car, medical treatment costs if you're injured, and complimentary tow truck service. Comprehensive car insurance also offers optional add-ons such as windscreen replacement, security devices, covering multiple drivers of a vehicle, protection for or to passengers, and more.

Myth #4 No-claims discount will be automatically applied

No-claims discount (NCD) is not automatically applied; the policyholder must actively request it upon car insurance policy renewal. This is especially valid when customers renew their car insurance online. Most car insurance providers offer a provision where customers may choose the proportion of NCD they are permitted to claim based on their claim’s history over the previous year. If you are unsure of how much you can claim, you can contact your current car insurance company and they will assist to check for you.

Myth #5 Renewal is only required annually

When a car insurance policy is renewed in Malaysia, the typical coverage period or length is typically 1 year. When the current coverage period ends, policyholders have the option of renewing their insurance protection for an additional term of one year.

Car owners can also shorten their car insurance coverage for six months. With this option, policyholders can select a lower coverage duration and then go back to choosing to renew for one year when the first duration expires. It is best to check with your insurance provider for more details as not all insurance companies might provide this option.

Myth #6 Expensive cars don’t always cost more

You may be surprised to know that some expensive sedans or SUVs have a lower premium rate. This is simply because the car model may have better claim rates for accidents or car theft due to its security features, while a cheaper car in the market could cost more to insure because the model is prone to theft and has fewer safety features on the road.

Myth #7 Your credit score has no effect on your insurance premium rate

Since having car insurance for your vehicle is mandatory in Malaysia, rest assured that your credit score does not determine your premium rate. It could play a role in your rejected car loan application when you want to buy a new car, though. So, pay all your bills on time every month, keep your balances as low as possible and you’ll be good to go!

Myth #8 Car insurance follows the car, not the driver

When you insure your car and put your name as the main driver and owner of the vehicle, the benefits only cover you and not the other passengers, unless you add on the Driver’s & Passengers’ Personal Accident coverage. This additional coverage provides personal accident and medical reimbursement benefits to you, your passengers, and other authorized drivers in the event of a road accident.

Renewing car insurance is like buying any other type of insurance. You will want peace of mind for yourself and your loved ones.

Although every insurance company in Malaysia may have different premium prices, benefits and coverage should be at the top of your decision-making process to ensure you get the best protection you need. Hence, it is vitally important to know and compare your options when it comes to these myths in order to make informed decisions when renewing car insurance online in Malaysia.

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