It’s always helping to understand and know the basics and most common terminologies of car insurance.
When comparing the best car insurance (or motorcycle insurance), it’s crucial for you to review the policies carefully before you sign on one of them. Most of us are not familiar with the legal terms stated in the policies.
Being ignorant of what they meant or misunderstanding the terms could be problematic should accidents happen. Which makes it all the more reason for you to know the terminologies of car insurance in Malaysia.
Just like in Part 1, we’ll break the terminologies down. This time, we’ll go through terminologies starting with D, E, and F:
Common car insurance terminologies starting with ‘D’
Disability
If an accident causes you disability where you’re no longer able to work, you’ll usually receive compensation from your Personal Accident policy. This applies to grave injuries that leave you incapable of working. In this situation, you will receive a lump-sum compensation.
Meanwhile, for cases where you are absent from work temporarily because of an accident. Compensation in the form of a weekly payment will be paid for up to two years.
Disability Benefit
This is an added provision for life insurance policies that waives the premium and at certain times a monthly payment income. This applies if you, the insured, become permanently and totally disabled.
Deductible
Refers to the agreement made between the insurance company and the policyholder. It is where both parties will share the medical treatment costs. For instance, if the total medical bill is RM300 and the excess amount option is RM100, your insurer will pay the RM200 balance.
Declaration
Refers to the part in an insurance policy that contains personal details and representations of the applicant. For example, past accidents or previous medical conditions.
Date of Issue
It is different from the insurance commencement date. The “Date of Issue” refers to the actual date when an insurance company finally issues the policy’s document.
Damages
Refers to the compensation for property damages or injuries sustained due to another party’s negligence or wrongful acts.
Common car insurance terminologies starting with ‘E’
Ex Gratia
The insurer pays the insured out of kindness or grace.
Exclusions
Anything excluded or not covered by an insurance policy
Exceptions
Also known as Exclusions in some cases. “Exceptions” are meant to limit the risk of an insurer. It can be found in the small print of policies.
Effective Date
The date when an insurance company is legally obligated to start the coverage. However, “Effective Date” is not the same as “Policy Date” and “Issue/Inception Date”.
Endorsements
The insurer or insured makes special plans or changes after the policy has already started.
Endowment
A combination of savings and protection where payment will be disbursed at a particular time if you sustain permanent and total disability or upon your demise.
Common car insurance terminologies starting with ‘F’
Fire and Theft
Comprehensive Car Insurance is usually not required for older cars. Therefore, an individual may extend a Third-Party policy for added premium in order to cover damage or loss caused by theft or fire (as well as attempted theft). However, idle or parked cars are only covered for theft and fire.
Free-Look Period
The period when policyholders can take their time to examine their newly issued insurance policy (normally 15 days). Once the period is over, the policyholder can make an exchange for a full refund of the premium by surrendering the policy without making claims.
Face Amount
In case a particular event that is insured happens, the insurer will make a lump-sum payment to the insured as promised.
Foreign Use (Cars)
In some countries, their car insurance can also be extended to cover the insured when they are driving in neighbouring countries. For example, some Singapore car insurance covers the insured while they are in Malaysia or Southern Thailand. Another example is when Hong Kong residents drive their vehicles in China, where they’re covered by their policies.
Fleet Policies
For companies that own a few vehicles, all of them can be insured and covered under one policy, typically with a discount given.
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Always remember to read your policy thoroughly. Check whether every detail is correct, and make sure you truly understand all the terms and conditions mentioned in the contract. Don’t sign the policy until you’re certain that everything’s right and satisfactory. You may also ask for help from someone to review the policy and ask for their second opinion.