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Critical Aspects in Vehicle Protection: Often Overlooked Factors

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With the rise in the cost of living and current prices of goods, it is imperative for us to practice thriftiness and good financial management. Opting for cheaper choices or offers becomes a priority to achieve savings.

However, very often, many fall into the trap of seeking cheaper insurance premiums and overlook critical factors that can help protect our assets.

Below is a comprehensive guide and often overlooked aspects in choosing suitable vehicle protection, including frequently overlooked aspects and relevant examples.

1. Takaful vs. Insurance: Choosing Wisely

For Muslims, Takaful is a more Shariah-compliant option. While insurance may offer lower premiums, it is our priority to opt for Takaful protection first. Insurance can be considered only when we hit a dead end.

There are various Takaful companies offering the best protection for various types of vehicles. However, there are some types of vehicles not covered by Takaful companies, such as older, antique, or highly advanced vehicles. In such cases, insurance can be used.

2. Compensation Assessment (Coverage): According to Current Vehicle Value

Choose compensation that is equivalent to the current value of the vehicle. Ensure it’s not too low or exceeds the current vehicle price, as if it’s too low, we might have to pay additional costs to repair the vehicle or cover the difference in value. If it’s too high, the company will only pay the equivalent value.

Example: An individual has a vehicle worth RM50,000 and opts for coverage with compensation of only RM30,000. If the vehicle is involved in an accident and needs repairs costing RM40,000, the individual will have to pay an excess of RM10,000 from their own pocket.

3. Mirror Protection: More Important Than We Think

It’s important to note that vehicle mirrors are not included in basic coverage; they need to be added as an additional benefit. Many overlook this, and the cost to repair mirrors can be surprisingly high. A single side mirror for a Myvi can cost RM800 nowadays. The value for mirror protection can be equivalent to the current price or lower. However, we need to add the cost of the mirror at the time of repairs.

Example: We choose not to include mirror protection in our vehicle coverage. One day, the side mirror of our vehicle breaks due to an accident. The cost to replace the mirror is higher than the amount we paid to include it in the coverage. If we opt for mirror protection, the replacement cost will be fully covered.

4. Disaster Protection: Safeguard Your Vehicle

For those residing or frequently in areas prone to flash floods or other natural disasters, it is wise to consider additional protection to shield the vehicle from damages caused by disasters. Disaster protection is an additional rider and is not included in basic coverage.

Example: An individual resides in an area prone to flash floods and chooses not to add disaster protection to their vehicle policy. Later, a flash flood occurs and damages the vehicle’s engine, requiring high repair costs. Any claims for compensation or recovery will be denied unless disaster protection is chosen, covering these costs entirely.

5. Additional Drivers: Make Wise Choices

If there are additional drivers who frequently drive our vehicle, such as parents, siblings, or friends, it is wise to include their names in the policy as additional drivers. This will help protect them and ensure that claims can still be made without any additional charges imposed by the company.

Example: We have a vehicle that is frequently driven by our sibling. Our sibling is involved in an accident, and the vehicle is damaged. If our sibling is listed as an additional driver in the policy, the claim will be processed without any additional charges.

6. Betterment Charge: Understand Clearly

Betterment charge is an additional fee imposed to cover the cost of replacing damaged vehicle parts with original spare parts if the car is over 5 years old.

Example: After an accident, a part of the vehicle needs to be replaced. If we choose to use used spare parts, a betterment charge may not be imposed. However, if we choose to replace it with original spare parts, we may need to pay a portion of the replacement cost.

7. Workshop Services and Maintenance: Prioritize Safety

Typically, vehicles over 5 years old are no longer sent to the car brand’s service center but to workshops listed under the takaful/insurance company. However, ensure that replacement parts are original or of high quality and not counterfeit. There are also additional plans to obtain replacements with original spare parts, requiring an additional payment on the selected plan.

It is crucial to choose vehicle protection wisely. Select protection that aligns with our needs and lifestyle. Gather comprehensive information before making any decisions to obtain vehicle protection. Expensive does not always mean good, and cheap does not necessarily mean it’s not. What’s good is what suits our risk requirements.

Aliff Shanusi

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