If you’re new to car insurance, you may be overwhelmed by the legalities of it all. Many of us don’t know some of the term meanings stated in a car insurance policy. We’ll explain a few basic and most common car insurance terminologies to know.


It can be tedious to find, compare and buy car insurance, particularly if you’re the fussy kind (which is good because we’re talking about saving yourself and others). In between all of that, you’ll also have to review the policies carefully before you sign on the dotted line.

For most of us, we may not be familiar with the legal terms stated in the policies. Not knowing what they meant or misunderstanding what they meant could cause you some problems in the future, which is why you need to know all there is to know about the terminologies of car insurance in Malaysia.

Since there are so many car insurance terminologies that you must know, we’ll break it down into a few parts. In this Part 1, we’ll list the terms that start with A to C:


Common car insurance terminologies starting with ‘A.’


Act Of God

This refers to whatever occurrences that happen naturally beyond human control, for example, floods or landslides…


Both parties involved agree to the terms of an insurance contract, where it is binding.


An unintended or unforeseen occurrence or event.

Accidental Bodily Injury

The insured’s body has injuries due to an accident.

Additional Perils 

Add-ons made for basic insurance policies. They are sometimes known as Special Perils or Fire policies, where they cover perils such as explosion, lightning, and fire; or losses due to flood and storm.

Age Limits

Insurance companies won’t accept policy renewals or applications by those who are under the age limit or over the age limit.


An individual who sells and provides services related to insurance policies on behalf of insurance providers.

Annual Limit

For a one-year policy, the Annual Limit refers to the maximum amount paid for your claims settlement. Your premium will be higher the higher the annual limit.


An individual who has been insured against loss.


Common car insurance terminologies starting with ‘B.’


Benefit Policy

A contract that pays the insured a sum of money in a specific occurrence, whether or not the person insured faces financial loss.


An individual who receives the payout from the contract made if the insured dies.

Beneficiary, Contingent

When the beneficiary dies before the insured, the death benefit will be designated to individual(s). 

Beneficiary, Irrevocable

A beneficiary that the insured cannot change.

Beneficiary, Primary

An individual or individuals who will receive the benefits.


If some wrecked parts need to be replaced with new ones when you send your damaged vehicle for repair, a portion of the costs will be covered by your insurer. The difference needs to be paid by you based on the standard betterment scale, ranging from 0% to 40%.

Bodily Injury Liability

 A legal liability arises when someone faces an injury or dies.

Breach of Contract

The insured fails to comply with his/her insurance policy’s terms and conditions. 


An individual who represents the insured by servicing and arranging insurance policies on the latter’s behalf. The broker earns commissions from the insurance company.


Common car insurance terminologies starting with ‘C.’



An individual makes a claim to an insurance company for a loss that the policy covers.


The policy owner (the insured) needs to comply with the policy’s terms before his/her insurers pay for the claim made.

Contract of Indemnity

This type of property insurance restores the insured’s financial condition to how it was before when he/she suffers a loss or misfortune. However, it is not considered a Contract of Indemnity for Personal Accident insurance if the insurer makes a lump sum payment to the insured, which has been pre-agreed.


In the case where an individual holds more than two insurance policies (which are contracts of indemnity) that are similar in terms of coverage for the same perils, the law will prevent the insured from recovering his/her loss under the policies so he/she could profit from it. 

Coordination of Benefits

When more than one policy covers an insured, the primary carrier will be determined by a group policy provision. This is to ensure that the insured will not receive overpayments in claims.


You must 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 confident that everything’s right and satisfactory. You may also ask for help from someone to review the policy and ask for their second opinion. Stay tuned for the second part of this blog post!

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