Insurance 101

Flood Insurance Coverage – Why You & Your Car Need It!

Most car owners may not know this, but a comprehensive car insurance does not come with a flood coverage unless it is added into the plan.

Most car owners may not know this, but a comprehensive car insurance does not come with a flood coverage unless it is added into the plan.  

Types of Floods in Malaysia You Need to Be Aware Of

Before we delve deeper into the technical aspects of flood insurance, we should know the common types of floods in Malaysia so we are more aware of our surroundings and the risks that we may face.

1.    Fluvial or river flood 

This type of flood happens when the water level in a river, lake or stream rises and overflows into the surrounding banks, shores and land because of heavy rain. There are a few factors that contribute to the raise of water level such as persistent storms hitting the same area or the barrier holding the water breaks and releases a large amount of water.

 

2.    Pluvial or flash flood

Pluvial flooding can happen during an extreme rainfall event, usually in a short period of 3-6 hours, at any urban or rural location. One common misconception about this is that flashflood must be located near a body of water to be at risk.

Typically, this type of flood starts in streams or rivers, ultimately spilling onto streets and into or underneath infrastructures with no real warning as it happens so quickly. Ineffective underground water systems especially in city centers like Kuala Lumpur could cause the flash flood to be more severe as we have seen multiple times this year alone.

 

3.    Coastal flood or surge flood

A surge flood occurs in coastal areas that lie close to the sea, ocean, or other large body of open water along the coast. These flood-prone areas are usually hit with extreme monsoon conditions that often cause a storm surge with high-speed winds that push the water offshore. This severe weather condition could lead to low-laying land areas being overwhelmed by water, damaging properties, crops, and loss of life.

As flooding is more common than you might think especially in a tropical country like Malaysia, there is no better time than now to stay protected against flood. It is also important to know what you should do if your car is caught in a flood situation and what role does flood insurance or special perils coverage play in the aftermath.

What’s Covered When You Add On Special Perils Cover?

Special Perils coverage is basically an additional premium that you pay when buying a car insurance policy to cover loss or damage to your car caused by flood, storm, tempest, earthquake, landslide, landslip, subsidence or sinking of the soil/earth (sinkhole) or other convulsions of nature.

Contrary to popular beliefs, adding Special Perils Cover is actually affordable. Here is how AXA calculates the premium of your coverage:
Full sum insured of your car x 0.2% premium rate(or RM100 for every RM50,000 of your vehicle’s sum insured)

What about the covered amount you may ask?

The condition of cover is pretty straightforward:

  1. If your car is insured on Market Value basis, we will pay you up to 25% of the Market Value to be determined at the time of loss.
  2. If your car is insured on agreed value basis, we will pay you up to 25% of the Sum Insured stated in Your Policy.
  3. If your car is not insured on Market Value or agreed value basis, we will pay you up to 25% of the Sum Insured as stated in the policy schedule or up to 25% of the Market Value to be determined at the time of loss, whichever is lower.

Although this benefit is available as an add-on, studies have shown that car owners in Malaysia still lack the awareness and understanding of flood insurance coverage.

Shockingly, during the unprecedented flood incident that happened at the end of 2021, only 18% of the vehicles towed away by AXA’s tow trucks had flood cover. That means over 80% of AXA’s customers did not opt for flood coverage in the Special Perils cover. Not only that, at that time, there were only around 4% of Malaysians who purchased flood insurance coverage for their vehicle.

In this equatorial climate with two seasonal monsoons  ̶Southwest Monsoon (late May to September) and Northeast Monsoon (November to March), the extra rainfall during these periods has proven to increase the risk of flooding. Although due to recent incidents, the Special Perils cover has an additional take up rate of 3.9% among AXA car insurance customers, many vehicles are still under-insured and flood coverage is still not one of the top priorities for most car owners. There should be a mindset change when it comes to renewing car insurance and road tax.

In most cases, people only realize the importance of adequate flood coverage after they have experienced loss or damage. So, instead of renewing car insurance only because it is required by law, car owners should see insurance as a financial protection.

Adding this optional flood coverage into your car insurance plan could help unburden you with the cost of repair, where the cost of repairing a flood-damaged car could reach between RM18,000 to RM22,000 or more, depending on how extensive the damages are.

If your car insurance is due to renew within these two months, you can renew it online with AXA at www.axamotoronline.comand remember to add on Special Perils coverage to give you the financial protection (and peace of mind) against damages to your vehicle from flood, storm, tempest, earthquake, landslide, landslip, subsidence or sinking of the soil/earth (sinkhole) or other convulsions of nature.

You can also reach out to AXA agents and partners or by emailing us at customer.service@axa.com.my if you prefer to be serviced by an experienced agent or customer service officer. They are always ready to provide you with what you need.

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