The law requires the owners of all motor vehicles used on public roads in Malaysia have valid insurance coverage for the vehicle. This insurance coverage can be one of two types – comprehensive or third party – and must be from a registered insurance company. It is up to the owner to choose which one although if the vehicle is still under a hire-purchase loan, then the bank will want comprehensive coverage to ensure it will be compensated in case of loss.

The difference between the two types of motor insurance is that comprehensive provides for compensation for the vehicle’s repairs if damaged or if a total loss (stolen or beyond repair. Third party coverage does not provide any compensation to the vehicle owner for anything. It only compensates other parties the vehicle has an accident with, either for their injuries/death or damage to property. If the vehicle is stolen, the owner will not get anything from the insurance company.

Like roadtax, insurance is usually renewed annually and the value insured will usually be adjusted to reflect depreciation (in the case of comprehensive coverage). The coverage for comprehensive insurance is usually standard but there are also certain exclusions for which compensation will not be given. For example, belongings in the vehicle which are stolen would not be covered and accessories like an expensive audio system might also not be covered. Not everyone is aware of the fact that there are exclusions.