When it comes to renewing your car takaful/insurance, you’ve heard of things like “Third-party Only” coverage and “Comprehensive” coverage. Naturally, the former costs less than the latter, but have you ever wondered what is the difference between the two? Well, if you didn’t know yet, here is an article to explain it to you.
First things first, we must understand why car takaful/insurance is mandatory by law. It is so that in the event that you (the first party) injure or cause damage to another driver/road user (the third party), you will be able to compensate the damages done through your takaful/insurance provider (the second party).
With that being the case, third-party takaful/insurance is what matters the most, since it serves to protect the other person involved in an accident. Sometimes that “third party” could be yourself if you’re claiming from another driver’s takaful/insurance.
To make things easier to digest, here’s a table to show you the differences between the two types of coverage. The coverage listed here is in accordance with the takaful programme that MotorTakaful.com by Etiqa provides. If this is your first time learning about MotorTakaful.com, click here to learn more about them.
|Liability to third parties||✓||✓|
|Damage to your own car arising from following incidents:|
|i. Accidental collision or overturning||✗||✓|
|ii. Collision or overturning caused by mechanical breakdown||✗||✓|
|iii. Collision or overturning caused by wear and tear||✗||✓|
|iv. Impact damage caused by falling objects provided no convulsions of nature is involved||✗||✓|
|v. Fire, explosion or lightning||✗||✓|
|vi. Breakage of windscreen, windows or sunroof including lamination/tinting film,||✗||✓|
|vii. Burglary, housebreaking or theft||✗||✓|
|viii. Malicious act||✗||✓|
|ix. While in transit (including loading and unloading)||✗||✓|
Third-Party Only coverage
So, “third-party only” takaful/insurance is pretty much the bare minimum when it comes to car coverage. So, what sort of damages can you claim from a “third-party only” coverage? Let us have a look at what is covered in third-party coverage provided by MotorTakaful.com by Etiqa.
As the name implies, “third-party only” coverage only covers “liabilities to third parties”. What are they? Well, in the incident arising out of the use of your car on a road, you and/or your Authorised Driver will be indemnified for the amount which you and/or your Authorised Driver are legally liable to pay any third party (including the third party’s costs and expenses) for:
- Death or bodily injury to any person except those specifically excluded under the Takaful Certificate
- Damage to property except those specifically excluded under the Takaful Certificate
Simply put, you can only claim coverage for the third party that is involved. Damage to your own car or your own property is NOT covered under a “third-party only” coverage. There are also a lot of other limitations to “third-party only” coverage, where cases like:
- Death or bodily injury to any passenger being carried for hire or reward
- Death or bodily injury to any person where such death or injury arises out of and in the course of the employment of such person by You or by Your Authorised Driver…
…and a few more (which we will list & explain in another entry) are not covered.
Comprehensive car coverage
Comprehensive takaful/insurance, on the other hand, adds coverage for YOUR OWN CAR on top of the “third-party only” coverage. The limitations to “third-party only” coverage such as “Death or bodily injury to any passenger being carried for hire or reward” are still applicable even if you have comprehensive car coverage.
With comprehensive coverage, damage/loss from incidents like theft, damages to your own vehicle (first party), and a few more items are covered. Key things that are covered by Comprehensive coverage but not “third-party only” coverage include damages and losses to your car arising from the following incidents:
- Accidental collision or overturning
- Collision or overturning caused by mechanical breakdown
- Collision or overturning caused by wear and tear
- Impact damage caused by falling objects provided no convulsions of nature are involved
- Fire, explosion, or lightning
- Breakage of windscreen, windows, or sunroof including lamination/tinting film, if any
- Burglary, housebreaking, or theft
- Malicious act
- While in transit i.e. being carried from one place to another (including during loading and unloading)
More holistic than “third-party only” coverage, there still limitations to comprehensive coverage. Damages/losses that are NOT COVERED by Comprehensive coverage include:
- Consequential losses
- Loss of use
- Breakdown or malfunction of parts
- Damage to tyres
- Convulsions of Nature
- Loss of electronic data
- Cheating or criminal breach of trust
While it may obvious to some, other may not realise that comprehensive coverage doesn’t necessarily cover everything. Tyre damage and malfunctioning parts are not covered by your car coverage. The former’s cost is to be borne by yourself, while the latter will have to be claimed through your vehicle’s manufacturer warranty (if still applicable).
Notice that even with comprehensive coverage, damages to your own car are still not covered if arising from “convulsions of nature” (i.e. floods). For this, you’ve probably heard of “special perils” coverage, which we will explain in upcoming articles. If you’ve reached this far down this entry, we hope you’ve fully understood the differences between “third-party only” coverage and comprehensive coverage.
There are also “General Exceptions” that will render your coverage useless such as incidents involving unlicensed drivers, fraud, and use of intoxicating substances. This too shall be covered in future articles which will be linked up here in the future.
And if you’re looking to renew your car coverage, remember that you could do so online through MotorTakaful.com by Etiqa. When you renew with them, you can get 10% rebate, cashback at the end of your policy, and more.