How to Avoid Under-Insuring Your Car (And Why It Matters)
Trying to save money on car insurance is normal, but under-insuring your vehicle can create serious financial gaps. A lower insured value means a lower premium, but it can also weaken your coverage when you need it most — especially during major claims.
What Is Under-Insuring?
Under-insuring happens when your insured value is lower than your car's actual market value. This often happens when drivers intentionally reduce the value to get a cheaper premium.
Why Under-Insuring Is Risky
It saves money upfront, but the risk shows up later. If your car is stolen or badly damaged, your compensation may not reflect the true value of your vehicle.
This matters most for Market Value-basis policies in:
Total loss situations
Theft claims
Major accident repairs
How to Set the Right Sum Insured
To avoid under-insuring, you should:
Use an insurance calculator to estimate a realistic value
Compare insurer recommendations
Check the market resale value of your car
Don’t Forget Road Tax Planning
Your road tax renewal depends on having valid insurance. A road tax calculator can help you estimate costs and plan your total renewal budget.
Why Many Malaysians Still Under-Insure
Common reasons drivers under-insure include:
Trying to save on premium
Lack of awareness
Not reviewing their policy yearly
How Drive+ Helps You Avoid This Mistake
Drive+ is PolicyStreet's membership programme that gives you extra savings without pushing you to cut corners on coverage.
Current benefits include:
Road tax discount — up to RM120 off, depending on your membership tier
Vouchers for car essentials — battery replacement, service maintenance, dashcam, and car tinting, plus a car rental voucher
Priority support for renewals, and step-by-step guidance if you need to submit a claim
This means you can keep your coverage where it should be, without feeling the pinch.
Renew your car insurance and road tax here.
Frequently Asked Questions
1. What does under-insured mean?
It means your car's insured value is lower than its actual value.
2. Is it illegal to under-insure?
No, but it is financially risky because your compensation may not reflect the true value of your vehicle.
3. How do I calculate the correct value?
Use a car insurance calculator to make an estimation and compare it against market value.
4. Does under-insurance affect claims?
Yes, it can reduce your payout significantly.
5. Can I adjust my insured value anytime?
Yes, you can generally adjust your insured value during renewing your car insurance.
6. Do I need car insurance before road tax?
Yes, valid insurance is required before you can proceed to renewing road tax.
7. Is cheaper car insurance always better?
No, getting the most suitable coverage according to your driving needs matters more than price.
8. How often should I review my policy?
You should review your policy annually as coverage by different insurers may change from time to time. At PolicyStreet, you can compare quotes between multiple insurers easily.
