You may have come across the term “waiver of betterment” in your car insurance policy. But do you know what waiver of betterment means and how it is useful to you and your car?
This article will therefore give you an insight into this car insurance add-on, waiver of betterment, for your knowledge.
Betterment
In the event of an accident, one of the things that worry car owners is whether their car would still be in good condition after the repair.
Usually, cars involved in accidents risk having other damages in the future, over time. This is because insurers only cover the cost to replace damaged parts with second-hand parts for vehicles that are 5 years old and above.
Therefore, a solution to that is to replace damaged parts with new parts during the car repair. However, replacing damaged parts with new parts is not free. You will be charged a certain amount for the betterment.
Fortunately, there is a way to be excluded from paying the betterment cost that is by getting an add-on cover called waiver of betterment.
Betterment – Additional cost that policyholders will have to bear when a damaged part of a vehicle is replaced with a brand new original part
Definition of waiver of betterment
Comprehensive insurance indeed covers the repair cost of the policyholder’s vehicle due to a car accident. However, for vehicles aged 5 years old and above, a betterment charge will be imposed on the policyholder if a damaged vehicle part is replaced with a brand-new original part. The scale of betterment in the insurance industry is as follows:
Example:
Assume you own a 10-year-old car and a new original replacement part costs RM3,000. If the applicable betterment rate is 40%, you would pay RM1,200, while the insurer would cover the remaining RM1,800, subject to the policy terms and claim assessment. The betterment contribution applies to the cost of the replacement part and may not include labour charges. Actual rates vary by insurer and policy.
Should you have a waiver of betterment additional cover, you will be excluded from paying the betterment to your insurer for a new vehicle part. This will therefore save you money.
However, Waiver of betterment eligibility varies between insurers. Some insurers may offer the add-on for vehicles within a specified age range, while others may apply different limits or conditions. The exact age limit should be confirmed from the insurer’s current policy wording or quotation before purchase.
Another example:
Assume that your 7-year-old car runs into an accident, damaging the driver’s side of the door. As a result, you need a replacement for the damaged door.
Should you have a waiver of betterment coverage, your panel workshop will replace the damaged door with a new door and not a second-hand door. You also do not have to pay for the betterment cost for the new part as the cost is waived.
Why is it important to get a waiver of betterment add-on cover?
As a car owner, having this additional coverage will ensure the quality of your vehicle after the repair at a panel workshop.
Through this add-on cover, you can get a brand new instead of a second-hand vehicle part. You get to use a brand new vehicle part from the factory and not just any vehicle part from vehicles that are no longer used.
Who is eligible to get a waiver of betterment add-on cover?
In many cases, vehicles aged between 5 and 10 years old are eligible for a waiver of betterment add-on. However, eligibility can vary by insurer: some may cover vehicles up to 15 years old, while others apply different age limits or conditions. Always check the insurer’s current policy wording or quotation before purchase.
How do you purchase a waiver of betterment add-on cover?
Only some insurance companies offer this add-on cover. You can easily purchase it when renewing your comprehensive policy.
How much do you have to pay for a waiver of betterment add-on cover?
In some quotations, the add-on may cost around RM50 to RM200, but this is only a general indication and is not guaranteed. Always check the current quotation for the exact amount. The premium may vary across insurers.
For your reference, below is a table of the premium charges for this cover by MSIG:
Insurance companies that offer waiver of betterment cover
Not all insurers offer waiver of betterment as a standard motor insurance add-on. Availability may depend on the insurer, vehicle model, vehicle age, sum insured, policy type and the terms available during renewal.
The following insurers may offer waiver of betterment or a similar betterment-waiver add-on, subject to eligibility and quotation availability:
- Allianz Malaysia
- MSIG Insurance
- Generali Insurance Malaysia
- Liberty General Insurance
- Berjaya Sompo Insurance
- Zurich Malaysia
Always confirm the insurer’s current product terms before purchasing. The insurer may impose specific vehicle-age limits, sum-insured requirements, restrictions on replacement parts or other conditions.
Example of calculation of waiver of betterment by MSIG
For your reference, below is the calculation of the betterment charge by MSIG:
Is it worthwhile to get a waiver of betterment add-on cover?
Yes. We recommend you get a waiver of betterment add-on based on the following reason.
As mentioned, if your vehicle aged 5 years old or above runs into an accident and is sent to a panel workshop for repair, you will only get second-hand or used parts to replace damaged vehicle parts. This may risk your car due to using second-hand instead of new vehicle parts.
Therefore, if you get the waiver of betterment add-on cover, you can get a new vehicle part without any extra charge. This will also ensure better car condition.
Conclusion
You may consider including the waiver of betterment in your insurance policy if your car is 5 years old or above. Not only do you get to keep your car running in optimal condition, but you could also save your money.
Simply visit Bjak to check out this add-on cover and other car insurance add-ons. You can also compare up to 16 insurance providers in Malaysia, subject to the insurers and products available through Bjak at the time of quotation.
Bjak is one of Malaysia’s leading insurance comparison websites, offering policies from multiple brands. Get your free insurance quote from Bjak today!
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