What Is Car Insurance Excess?
When you make a claim on your car insurance, the term “excess” refers to the amount of money you need to pay out of your own pocket before your insurer covers the rest. Think of it like a cost-sharing arrangement, you pay a small part, and your insurance company pays the majority.
For example, if your insurance excess is RM400 and the total repair cost is RM3,000, you’ll pay RM400 while your insurer covers the remaining RM2,600. The purpose of this system is to prevent fraudulent or small, unnecessary claims and keep overall premiums lower for everyone.
Contents
- What Is Car Insurance Excess?
- Types of Insurance Excess
- Why Car Insurance Excess Matters
- How to Calculate Your Excess
- Tips to Reduce or Avoid Paying Excess
- Compare & Renew Car Insurance on MetaFin
Types of Insurance Excess
In Malaysia, there are several types of excess you might encounter when buying or renewing car insurance. Understanding each helps you avoid surprises during a claim.
1️⃣ Compulsory Excess
This is the minimum excess amount set by your insurer that must be paid regardless of who is driving or what caused the accident. Typically, it ranges from RM400 to RM500 depending on your insurer.
2️⃣ Voluntary Excess
Voluntary excess is an additional amount you choose to pay on top of the compulsory excess. Drivers often opt for a higher voluntary excess to enjoy lower premium rates. However, it means you’ll pay more during a claim, so only choose this if you’re confident in your driving record.
3️⃣ Young or Inexperienced Driver Excess
If your vehicle is driven by someone below 21 years old or a driver not named in your policy, insurers may apply a young driver excess. In Malaysia, this is often fixed at RM400 per claim. This protects insurers from higher-risk drivers.
4️⃣ Unnamed Driver Excess
Similarly, if an accident occurs and the driver is not listed under your policy (even if they are above 21), you may still need to pay this type of excess. Always ensure that frequent drivers — spouse, children, or friends — are named in your policy to avoid this cost.
For further reading, you can check Bank Negara Malaysia’s official insurance guidelines for consumer protection and car insurance terms.
Why Car Insurance Excess Matters
Understanding your insurance excess is crucial because it directly affects your claim amount, out-of-pocket cost, and premium rate. Here’s why it matters:
- ✔️ It determines how much you pay during a claim.
- ✔️ It influences your annual premium, higher excess often means lower premiums.
- ✔️ It prevents small, unnecessary claims that could increase your premium next year.
In Malaysia, most insurers such as Etiqa, Allianz, and Tune Protect apply similar excess structures, but the exact terms may vary. Always read your policy schedule or check through MetaFin to confirm your specific excess clause.
How to Calculate Your Excess
Calculating your car insurance excess is simple once you know your policy details. Most insurers state the fixed amount clearly in your e-policy or certificate of insurance.
Example calculation:
- Repair cost: RM5,000
- Compulsory excess: RM400
- Voluntary excess: RM200
- Total excess payable = RM600
This means the insurer will cover RM4,400 and you’ll pay RM600. However, if the accident involves an unnamed driver under 21, you might need to pay an additional RM400, making the total RM1,000.
Some insurers waive the excess under special circumstances. For instance, when you are not at fault and have valid evidence (police report and third-party details). You can find more about this from Persatuan Insurans Am Malaysia (PIAM).
Tips to Reduce or Avoid Paying Excess
No one likes paying more than necessary. Here are a few smart tips to manage or even reduce your car insurance excess in Malaysia:
1. Always List All Frequent Drivers
Include all family members or friends who drive your car regularly in your policy. This helps you avoid unnamed driver excess penalties during a claim.
2. Drive Safely and Maintain Your NCD
Your No Claim Discount (NCD) reflects your driving record. A clean record means better discounts and sometimes lower excess requirements from insurers.
3. Compare Policies Before Renewal
Different insurers have different excess rules. Some allow customization or waive voluntary excess. Use MetaFin’s Car Insurance Comparison tool to find policies with fairer terms and affordable premiums.
4. Avoid Letting Uninsured Drivers Use Your Car
If someone not named in your policy causes an accident, you’ll have to bear the excess, sometimes up to RM400. Always check your coverage list before lending your car.
5. Understand What’s Worth Claiming
For minor scratches or small repairs under RM500, it might not be worth making a claim since your excess could be similar to or higher than the repair cost. Instead, pay out-of-pocket and keep your NCD intact.
Compare & Renew Car Insurance on MetaFin
Understanding your car insurance excess helps you make smarter decisions when renewing or filing a claim. If you’re unsure which policy gives the best value, MetaFin makes it easy to compare prices, coverage, and excess terms from multiple insurers, all in one platform
🔍 Compare Car Insurance Plans on MetaFin
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