Whether you realise it or not, insurance touches nearly every aspects of your life. When you buy a car, you are required by law to purchase motor insurance. Or when you apply for a housing loan, the bank will only approve the loan when you have a fire insurance policy. There are other insurance policies such as personal insurance, medical or health insurance, travel insurance and many, many more.

Before you decide to scrutinise the different insurance policies that you have already taken either intentionally or otherwise, this article intends to provide some basic understanding of the role of insurance and provide some useful pointers when you next apply or renew your insurance.

By being a well-informed insurance consumer, you will not only spend your ringgit wisely but can also save money in the long run.

What is insurance? The idea is that if a large number of people each pay some money into a pool, then sizeable sums can be drawn from the pool to ease the hardship of those who might suffer losses.

In practice, insurers manage the premium money paid by policyholders. In good years, when claims are few, insurers are able to build up reserves of money to cater for bad years when claims are heavy.

'Utmost good faith'

Insurance contracts or policies are based on trust. The insurer trusts you, the policyholder, to give precise and true details of the subject matter to be insured. This is called the principle of 'utmost good faith'.

Care should always be taken to tell the whole truth so that insurance companies can make a fair assessment of the risk. Equally, having effected an insurance policy, you should read all the documentation very carefully to ensure that you understand the terms and the risks the policy does and does not cover.

Useful pointers on buying general insurance

Before you commit yourself to an insurance policy, it would be best to obtain several quotations for comparison. After all, Malaysia has many insurance companies to select from. Out of which, 50 companies offer general insurance protection.

When selecting an insurance company, you should look for one that provides good security, a reputable claims service, reasonable prices and prompt documentation.

You can also obtain the assistance of insurance agents. However, to ensure that you are protected from unscrupulous agents, make sure that you deal only with PIAM registered agents.

When selecting an agent, you should look for one that provides prompt, efficient and helpful service. For choice, there are over 30,000 PIAM registered agents located in all parts of Malaysia to select from.

For the businessperson, another source to obtain advice on insurance cover is through an insurance broker. Insurance brokers are full time professionals who advise their clients on the most appropriate scope of insurance covers and which insurers in town offer the most advantageous insurance protection at the price that suits their individual client's needs.

Insurance brokers fulfil many other functions for their clients including making sure that the insurance arrangements are kept up to date, advise on amendments and renewals and forward premiums to the insurance companies.

After making a decision to purchase a particular policy, read the policy when you receive it. If any item in the document is not in order, the policy holder is advised to query this directly with the insurance company and request the necessary amendments be made.

The policy that is purchased is a legal contract and would be required in the event of a claim. Hence, it is preferable to keep this document which lists the insurance taken out and the risks covered in a secure place.

As a policyholder, you should always ensure that the policy coverage period is monitored and insurance companies or their agents have a system in place where reminders of expiry or renewal dates are sent out to their clients.

To avoid lapsing or non-renewal of an insurance policy, insurance premiums should be paid on time. It is advisable to make payment via crossed cheque with an endorsement stating the purpose of the payment and, if possible, the policy number.

It is also advisable to ask for a receipt stating the amount and purpose of the payment whenever a payment is made.

In addition to paying through cheques, some insurance companies today have made it even more convenient to pay insurance premiums through either credit cards or through direct bank debit.

60-day Premium Warranty clause

General insurance companies are required to enforce a 60-day Premium Warranty clause on most types of insurance covers except for motor insurance policies, travel insurance, marine hull insurance and insurance bonds.

Under the Premium Warranty clause, the insured is required to pay the premiums charged for the insurance within 60 days from the effective date of insurance cover (your insurance policy, cover note and/or renewal certificates will show the effective date of cover). If the premium is not paid by the 60th day, the insurance cover will be automatically cancelled from the 61st day.

In the case of motor insurance, it has been prescribed by law that motor insurance cover can only be issued by insurers or their agents on a 'cash before cover' basis. This means that the premiums must be paid before a motor insurance cover note or policy can be issued.

Please send your questions on general insurance to:
Persatuan Insuran Am Malaysia,
3rd Floor, Wisma PIAM, 150, Jalan Tun Sambanthan,
50470 Kuala Lumpur.
Tel : 03 - 2274 7395/9
Fax : 03 - 2274 5910

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