Thursday, August 9, 2012

Motor insurance and you -- Part 2

[Article copyright Ewe Paik Leong]

Trust the approved insurance sales outlets. You can depend on established motor companies, motoring organisations like the AAM, finance institutions and government agencies like the post office. If in doubt, call the head office of the insurance companies to verify the status of the agent if you fear that you may fall victim to a con job. Anyway, the authorities have taken steps to reduce the chances of false cover notes surfacing.

You have the right to choose your own insurance company. Those who have owned vehicles before and are trading in for another vehicle are entitled to a no claim discount (NCD) or more commonly known as "no claim bonus" for any insurance renewal with even other insurance companies provided that he or she is genuinely entitled. The NCD starts with a 25% discount after the first year without claims. It increases as an inducement to motor vehicle owners to be careful on the road from 30% on the second year to a maximum of 55% after the fifth consecutive year onwards of no claims. Once a claim is made, the NCD system starts from the beginning again for the policyholder.

If you are a bad risk (frequently involved in accidents or physically challenged) or your vehicle is very old, the insurance company has the right to levy loadings or increases in premiums. If you are not happy with the excessive loadings, shop around the insurance companies till you get a better deal but on the assumption that everything being equal. Insurance companies view every client as a risk. Insurance business is about risk taking and with the high payout of motor insurance, it is not a lucrative business -- for most insurance companies not just in Malaysia but around the world.

When shopping around for insurance, make sure the terms and conditions offered are the same. A premium rate can be less than others but may not be worth the savings if the excess clause is higher. In comprehensive coverage, the policyholder is normally asked to bear the initial cost of repair or damage. The figure can range from RM200 to the first RM1,500 of claims. This means if you have damaged your car in an accident and the repair costs RM5,000 and there is an insurance excess clause of RM1,000, it means you will only get RM4,000 from the insurance company as compensation. If the repair cost is under RM1,000, then you have to bear the full brunt of the repair cost.

Basically, insurance business works by pooling premiums collected to form a fund. Payouts are made from the fund. To expedite settlement of motor vehicle accident claims, there is a system called 'knock-for-knock' whereby only credit and debit notes flow between the various local insurance companies involved. The policyholder benefits from this system as it means a faster approval of their claims if the other party is insured by another insurance company.

If you are involved in an accident with another vehicle, the first thing to do is to stop and exchange particulars with all the people involved. Before allowing your car to be towed away, check if the tow truck operator is from the panel of workshops approved by the insurer. Note down the tow truck vehicle registration number, name of tow truck driver and whatever details are printed on the front doors of the vehicle for your reference in case your car goes missing.

Once you have reported an accident and your car has been towed to the nearest police station or workshop, a repair quotation or claim is submitted to the insurance company on your behalf. Then your insurer will send a loss adjuster to assess the damage to your car and identify the circumstances of the accident.

Remember to remove all valuables from the car before it is towed away. If possible, include items like steering lock, spare keys, tool kit, CDs, cassette tapes, umbrellas and the like. Go through the glove box and door pockets and remove important items like house keys, petrol cards, Smart Tag, Touch N Go cards, parking season passes, etc.

A loss adjuster is a specialist whose job is to find out what really happened and how it happened. He will recommend the insurer him much to settle a claim as submitted in each case. You also have the right to accept or reject the workshop's repair quotation.

On completion of the repair job, the onus is on you to have a thorough check. Do not be tempted into collecting the vehicle at night or rushed into collecting the car. You have the full rights to check every part thoroughly. Check also for items like tool kit, spare tyres, and accessories that are often reported to be missing or replaced while the vehicle is at the workshop.

If for any reason you are not happy with the repair, such as poor paint job, sub-standard parts used, etc., write it down on the workshop's vehicle release slip which you will be asked to sign. Note the name of the person you made your complaints to.

As you drive home or as the week of driving progresses, you may discover more problems. List down all of them and send a registered letter to your insurer and a copy to the workshop. You have the right to have the vehicle repaired till it is of roadworthy condition. For third party and expert evaluation, send your car to Puspakom for inspection to support your claims. Conduct all communications in writing and keep proper record of the sequence of claims. This is very important should the case need to go to the courts to be settled.

One thing which even the seasoned car owners fail to do is to read the insurance policy thoroughly. It is a very important document that should be kept under lock and key in the house. By reading the policy, you will know what is covered and what is not.


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