KUALA LUMPUR: The new basic motor insurance to replace the existing third-party motor insurance will be implemented by early next year.
Third-party policy holders, mostly motorcyclists, will have “assured accessibility” to the new scheme, which is jointly provided by the Government and the insurance industry.
The insurance industry, which incurs about RM1bil losses a year by selling third-party policies, has been increasingly reluctant to offer such policies.
The low premium for third-party policies, which has remained unchanged since 1978, has contributed to the massive losses.
A Finance Ministry source told The Star that the Government would have to subsidise the new scheme if the current premiums were to remain.
Some 3.54 million of the 10.8 million motor policies at the end of last year were third-party, which came with a very low premium. The rest were comprehensive policies.
Third-party policies cover the damages incurred on the innocent party in a road accident while comprehensive policies allow both parties to claim for insurance payments.
For instance, the owner of a 1300cc Proton valued at RM42,000 last year only paid RM72 in premium for a third-party policy to insure against third-party bodily injury and death, and property damage.
The owner would have had to pay RM1,291.20 for a comprehensive policy to insure against thirdparty bodily injury and death and property damage, own damage and theft.
The coverage for the new basic motor insurance is similar to the third-party policy.
Owners will also be offered options — from topping up their coverage of third-party bodily injury and death to others like theft, own damage, passenger liability, personal accident, windscreen, flood and others.
The scheme comes with a liability limit of up to RM2mil and settlement time is targeted to be between two and four weeks.
Under the current third-party policy, which has no liability limit, it takes between one and three years to settle claims.
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