1. What is Gap Insurance?

Gap insurance covers the difference between what you owe on your car loan and the car's actual cash value if it's totaled or stolen. In Malaysia, this is particularly important due to rapid vehicle depreciation.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Car\ Price \) — Current value of the vehicle in Malaysian Ringgit (RM)
• \( MY\ Factor \) — Malaysia-specific factor based on vehicle type, age, and other risk factors (typically 0.01 to 0.05)

Explanation: The MY Factor accounts for local market conditions, depreciation rates, and insurance risk factors specific to Malaysia.

3. Importance of Gap Insurance

Details: In Malaysia's automotive market where vehicles depreciate quickly, gap insurance protects owners from significant financial loss if their vehicle is written off early in the loan period.

4. Using the Calculator

Tips: Enter the current market value of your car in RM and the MY Factor provided by your insurer. The MY Factor is typically between 0.01 (1%) and 0.05 (5%) in Malaysia.

5. Frequently Asked Questions (FAQ)

Q1: Who needs gap insurance in Malaysia?
A: Anyone with a car loan where the outstanding amount might exceed the vehicle's market value, especially new car buyers.

Q2: How is the MY Factor determined?
A: Insurers consider vehicle make/model, loan duration, depreciation rates, and historical claims data specific to Malaysia.

Q3: Is gap insurance mandatory in Malaysia?
A: No, but it's highly recommended for new vehicles or long-term loans where depreciation is significant.

Q4: Can I get gap insurance for used cars?
A: Yes, though the MY Factor may be higher due to faster depreciation of used vehicles.

Q5: Does gap insurance cover the full loan amount?
A: It covers the difference between the insurance payout and the outstanding loan balance, up to policy limits.