Insurance 101

Unlocking 21 Car Insurance Definitions for Smarter Coverage Choices

Whether you're a new car owner or an experienced driver, our guide unlocks car insurance definitions that can be confusing for you.

An Asian woman wearing purple oversized jacket, holding an open file in bright red color. The woman looks confused like trying to understand car insurance terminology.

Ever felt confused by the jargon used in your car insurance policy? You are not alone!

Whether you are a first-time car owner or an experienced driver, understanding insurance terminology can save you time, money, and unnecessary stress.

Imagine knowing exactly what your policy covers and what it does not, or understanding how your claims are processed. This clarity is within reach.

Keep reading to discover the key terms that will make your car insurance purchase experience much clearer.

An Asian woman wearing purple oversized jacket, holding an open file in bright red color. The woman looks happy while pointing to the red file with her free hand, implying that she understands car insurance terminology.

To make it less confusing, let’s organise the car insurance terminologies into sub-categories into related services such as Coverage, Claims, Policy Details, and Participants or Insured. Here is how they can be arranged:

Coverage

  1. Agreed Value (AV): The maximum amount we will pay for your car if it is stolen or destroyed, as agreed at the start of your policy.
  2. Exclusions: Specific situations where your insurance will not cover the costs of repair, replacement, or liability.
  3. Market Value (MV): The cost of buying a similar car (same make, model, age, and condition) at the time of loss. Insurers use this value to determine the payout to you in the event of a total loss of your vehicle.
  4. Third-Party Only Insurance: This insurance covers only third-party liabilities and does not cover any loss or damage to your car.
  5. Third-Party, Fire and Theft Insurance: This insurance covers your car only against loss or damage caused by fire, explosion, lightning, burglary, housebreaking, or theft.

Claims

  1. Adjuster: A person or entity registered under the Financial Services Act 2013, appointed to investigate the cause and circumstances of a loss, and determine the amount of loss.
  2. Betterment: If new original parts are used to repair your car and it ends up in better condition than before, you will need to pay a portion of the costs for these new parts.
  3. Excess: The amount you must pay out of pocket for each claim, regardless of who is at fault.
  4. Loss of Use: Expenses or financial losses you incur because you cannot use your car, such as the cost of renting a replacement car or travel expenses.
  5. Under-Insurance or Under-Insured: If the sum insured for your car is less than its market value at the time of loss, the insurer will only cover a proportionate part of the loss based on the difference between the market value and the sum insured.

Policy Details

  1. Certificate of Insurance: A document issued as required by the Road Transport Act 1987, detailing the conditions of your policy.
  2. Endorsement: An additional document that modifies the coverage of your insurance policy.
  3. No Claim Discount (NCD): A discount on your premium for not making any claims during the previous insurance period.
  4. Period of Insurance: The period shown in the schedule during which your insurance policy is active.
  5. Policy: Includes the schedule, the certificate of insurance, and all endorsements listed in the schedule.
  6. Sum Insured (SI): The highest amount an insurance company will pay if your car is damaged or lost due to a covered incident.

Participants/Insured

  1. Authorised Driver: Anyone who drives your car with your permission, provided they have a valid driving license and are not disqualified by law or any other reason.
  2. Named Driver: Individuals named in your policy who are authorised to drive your car.
  3. Ombudsman for Financial Services (OFS): An independent body that helps resolve financial disputes between you and the insurer.
  4. Repairer: Motor repair workshops approved by the insurer or by Persatuan Insurans Am Malaysia (PIAM) under the PIAM Approved Repairers Scheme (PARS), or any repairer given special permission by the insurer for a claim.

In conclusion, understanding your car insurance terminology does not have to be daunting. By getting to know these important insurance definitions, you can be sure that you are well-informed and confident in your choices.

The next time you renew your car insurance online or make car accident claim, you will know how to handle the process smoothly. Remember, understanding your insurance definitions brings peace of mind on the road. Happy driving!

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