Estimator Car Insurance

Estimate Car Insurance Before Buying a Car

Your next car will have costs beyond the monthly payment. Find out how to estimate car insurance before you buy.
Estimator Car Insurance

Even the savviest car shoppers can forget to estimate car insurance costs before buying.

The type of car you drive is just one variable car insurance companies plug into their formulas to determine how much to charge you. Depending on the vehicle and insurance company, the cost of car insurance can vary by hundreds of dollars a year for the same driver.

That’s why it pays to get some initial car insurance quotes for models you’re thinking about buying. Along with gas mileage and maintenance costs, car insurance premiums are an important consideration when calculating the total cost of owning a car.

If you want to see average rates for drivers in your state, try this car insurance cost estimator.

Car Insurance Calculator

Working out the current value of your car isn’t always easy, especially if it’s been a while since you bought it. At AA Insurance we use an independent company that specializes in vehicle valuations to provide an indicative replacement value. When you get a quote with us, simply enter the details of your car and we’ll automatically calculate a replacement value or Agreed Value. This is the amount you’ll be paid out if your car is written off or stolen. Remember, if you don’t think the value provided is accurate for your car, you can talk to us about adjusting it.Estimator Car Insurance

While there are a number of car insurance premium calculators available online, many Malaysians are still wondering what is the exact formula used to calculate their own car insurance premium and also, what are the factors involved?

The structure is slightly complex but with the tables shown below, we will break down the formula into different segments and help you understand how car insurance premium in Malaysia is calculated.

Before you buy or renew your car insurance, you will need to know a few things first:

1. Your Car’s Gross Market Value

Your car’s market value depreciates on an annual basis and you must be able to get an estimation of your car’s latest market value to be able to ensure it accordingly. You can either consult the nearest branch of your car’s brand provider, independent car workshop or just do it online!

2. No-Claim Discount (NCD) and Manufactured Year of the Vehicle

The NCD system (set by authorities and followed by insurance providers) allow car owners to enjoy discounts over time if they do not claim any damages from their insurance companies each year. Refer to the table below for the NCD you are entitled to in different categories of the period:

Coverage Duration Discount (%)
First Year 25
2nd Year 30
3rd Year 38.33
4th Year 45
5th Year 55

Table 1

3. Types of Car Insurance

As you may already know, there are three types of car insurance in the market: comprehensive; third party fire, and theft; and third-party standalone.  To calculate the car insurance premium of a third party (insurance owned by the majority of car owners), you will need to start by calculating the comprehensive insurance coverage.

4. Your Location

If you live in West Malaysia, you will be charged a higher car insurance premium than those in East Malaysia due to higher risks and the car’s higher market value in West Malaysia in general.

5. Your Car’s Cubic Capacity

Basically, this is the engine power of your car and it is important as it determines the car insurance basic premium you will need to pay according to the latest table below for both West and East Malaysia.

Private Car Schedule of Premiums
West Malaysia (RM) East Malaysia (RM)
Cubic Capacity (cc) Not Exceeding *Comprehensive  (X – Rate for first RM1,000 sum insured) Third Party *Comprehensive  (Rate for first RM1,000 sum insured) Third Party
1400 273.8 120.6 196.2 67.5
1650 305.5 135.0 220.0 75.6
2200 339.1 151.2 243.9 85.2
3050 372.6 167.4 266.5 93.6
4100 404.3 181.8 290.4 101.7
4250 436 196.2 313.0 110.1
4400 469.6 212.4 336.4 118.2
over 4400 501.3 226.8 359.5 126.6

Table 2

Formula to Calculate Your Car Insurance Basic Premium

For West Malaysia, the basic premium for a new car of each category =

Comprehensive rate for first RM1,000 sum insured (from the table above) + RM26 for each RM1,000 or part thereof on value exceeding the first RM1,000.

For East Malaysia, the basic premium for a new car of each category =

Comprehensive rate for first RM1,000 sum insured (from the table above) + RM20.30 for each RM1,000 or part thereof on value exceeding the first RM1,000.

An example of Car Insurance Premium Calculation for Both Comprehensive and Third Party, Fire & Theft Coverage (West Malaysia):

car-insurance-premium-example

(Table 3) Note: The above rates are for private owned vehicles only and may differ from the actual premium. Coverage is subject to acceptance by the insurance company. 

Table 3 shows the calculation of gross premium for a four-year-old Proton Wira 1.5 with the insured sum of RM50,000 for both comprehensive and third party, fire & theft coverage. With cubic capacity (cc) at 1468, the basic premium will be calculated using the second tier in the previous table (refer to Table 2).

Though the car maybe four years old, (d) 25% NCD is applied here and it is possibly because the owner has made a claim two years ago which disqualified him from enjoying the fourth year NCD (refer to the Table 1).

To get the final premium payable for comprehensive insurance coverage, you need to add in 6% GST, optional insurance coverage (windshield, flood, audio system and others listed below) and a stamp duty fee of RM10.

Final Premium Payable for Comprehensive Coverage =

Gross Premium + Optional Coverage (If any) + 6% GST + Stamp Duty (RM10.00)

If you are only opting for a third party, fire, and theft insurance coverage, you will need to find out 75% of the gross premium for your car’s comprehensive insurance. Then, you can get the premium payable after deducting NCD (if applicable) and adding on GST as well as stamp duty.

The formula of Third party, fire & theft coverage premium =

75% (Comprehensive coverage premium) – 25% NCD +6% GST + stamp duty (RM10.00)

Optional Insurance Charges

Some insurance companies may offer optional insurance coverage such as flood and theft packaged with the third-party coverage, so make sure you ask clearly what you are paying for as well as coverage.

(Note: Comprehensive insurance coverage does not include optional insurance coverage as listed below.)

  • Audio system and windshield – 15% of the sum insured.
  • Driver (first two are free) – RM10.00
  • Strike, Riot & Civil Commotion (SRCC) – 0.3% of the sum insured.
  • Special Perils (Flood, Landslide, Storm) – 0.5% of the sum insured.
  • Legal liability for Passenger Act of Negligence – RM7.50 per vehicle.

If you prefer to save yourself the headache, you can easily get an estimation of your car insurance premium through this calculator. However, it is always better to check it on your own and ask us any question if you have any!

Why some cars cost more (or less) to ensure than others

Certain cars cost more to insure than others because carriers use crash and theft statistics to help set rates for each model separately. So if the car you choose tends to be stolen or crashed more, chances are you’ll pay more for insurance. The reason sports cars cost more to cover, for example, is because they’re more likely to be driven fast and crashed hard by their owners.

Here are some specific characteristics that affect the cost of auto insurance:

  • Retail price: Generally, the pricier the car, the more expensive it will be to ensure. Assuming you buy comprehensive and collision coverage, the insurance company will be on the hook to pay out the car’s market value if the vehicle is stolen or wrecked beyond repair.
  • Cost of parts: High-end models often use parts made from carbon fiber and other specialized materials that are expensive to repair, which drives up the cost of damage claims.
  • Safety: Over time, cars that do a good job of protecting drivers and their passengers bring down insurance costs. Fewer injuries mean fewer claims for medical payments and personal injury protection.

How to get car insurance estimates

In your search for a car, follow these steps for estimating the cost of car insurance.

  • Narrow down your top choices for vehicles. Find tips for picking a car here.
  • Decide how much coverage you need. If you’re buying a new car, including collision and comprehensive, which cover damage or loss of the vehicle. If you get a car loan for a used car, you’ll need this coverage because the lender will require it.
  • Get quotes for the same amount of coverage for the vehicles you’re thinking about buying. NerdWallet’s car insurance comparison tool can help you get started. You don’t have to provide personal information to get initial estimates.

Now you can factor in the cost of car insurance to help you make a final choice.

How does my car type affect my insurance rates?

Not all car models are created equal. If you’re in the market for a Tesla, for instance, insurance companies won’t treat you like they would if you were the buyer of a pre-owned Honda Civic.

For one thing, with more expensive vehicles come pricier insurance packages. Insurers may assess risk differently, but higher-end cars are more susceptible to theft and damage. Insurance companies will often seek to cover the entire retail cost of a car should it be stolen or irrevocably damaged in a collision.

Owning a car with better safety ratings, or one which might be more reliably protective of drivers and passengers will help lower insurance costs. Drivers of “riskier” vehicles may otherwise be in jeopardy, as increased risk of injury will likely lead to higher premiums.

Do you know what your car is made of? You should—some models are manufactured with special (and expensive) materials that are difficult to repair. Insurers might raise your premium if you own a vehicle of this type, anticipating the higher cost of damage claims.

Estimator Car Insurance

Leave a Reply