Car Insurance Jargon in Malaysia Made Easy: Your Plain-English Guide
Car insurance jargon can be confusing, especially with terms like NCD, excess, betterment charges, and KFK.
When the terms aren’t clear, it’s harder to know what can affect your payment and what you’re covered for.
PolicyStreet’s online insurance platform simplifies these terms so you can spot extra costs, choose meaningful add-ons, avoid unnecessary coverage, and handle claims more smoothly.
1. No Claim Discount (NCD): Your Loyalty Reward
The No Claim Discount (NCD) rewards you for every claim-free year, increasing up to 55% after five years.
*Note: NCD applies to the base premium (the starting cost of your insurance before add-ons), not the total premium after add-ons.
For example, if a person has a premium of RM1,000 and gets a 25% NCD, their premium will be RM750.
When you make a claim, your NCD resets to the lowest tier, which is why many drivers choose KFK to protect it.
Check out our complete NCD guide for all the details to learn more about your NCD level.
2. Excess Amount: What You Need to Cover
The excess is your share of the repair cost. You’ll pay this amount directly to the car workshop, while your insurer settles the remaining amount.
Example
If Ahmad gets into an accident, he must first pay the compulsory RM400 excess. If his policy also includes a voluntary RM400 excess, he’ll pay that as well before his insurer covers the rest of the repair cost.
Check out our step-by-step claims guide for practical tips on managing your claims.
3. Betterment Charges: The New-for-Old Cost
Betterment charges basically cover the cost of the upgrade your car gets when old parts are replaced with new ones in the event of a claim.
For example, if your six-year-old car needs a new bumper, you may have to cover 30%–40% of the cost because the old one had already depreciated.
Older cars tend to incur higher betterment charges, so it’s important to keep this in mind when choosing coverage.
PolicyStreet makes it clear during policy selection and even offers an add-on that lets you waive betterment charges, helping you choose what works best for your car’s age.
4. Sum Insured: Your Payout Ceiling
The sum insured is the maximum amount your insurer will pay if your car is stolen or written off.
PolicyStreet makes it easy to compare both options, showing how each affects your coverage and cost for car insurance in Malaysia so you know what you'll receive in the event of a claim.
5. Third Party Fire & Theft (TPFT) vs Comprehensive Car Insurance
The difference between both plans lies in the level of protection they offer, which is important to keep in mind.
Third Party Fire & Theft Insurance
TPFT covers third-party losses plus fire and theft protection for your own car. It does not cover damage to your vehicle if you cause an accident.
Motor Comprehensive Insurance
Comprehensive insurance offers the widest protection, covering your car and third-party losses, including accidents, fire, and theft.
Most Malaysian drivers go for comprehensive insurance because it saves money in the long run. A slightly higher premium is still much cheaper than paying for repairs or parts out of pocket when accidents happen.
New to car insurance? PolicyStreet's beginner guide to insurance types explains the differences in more detail.
6. KFK Coverage: Protecting Your No Claim Discount
AI Genrated Image: Knock-for-Knock (KFK)
Knock-for-Knock (KFK) lets you claim from your own insurer when you’re not at fault, protecting your NCD and speeding up repairs.
Any comprehensive policy automatically includes KFK, and it’s especially helpful when you can’t obtain the other driver’s insurance details, though you’ll still need to pay the excess fees.
Additional Coverage You Should Know About
Beyond the basics, several additional coverage options are worth considering:
*Note: These coverages may not be available if users are buying third-party coverage.
To better understand how these add-ons affect your costs, check out our guide on insurance pricing.
PolicyStreet also helps you customise your coverage based on your lifestyle needs, so you can find the ideal policy with the add-ons that suit you, especially when looking for cheap car insurance in Malaysia.
New to the car insurance renewal process? PolicyStreet’s first-time user guide takes you through each step.
Ready to Purchase Car Insurance Easily?
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