ICE vehicles lag behind EVs in flood insurance coverage

ONLY 13% of internal combustion engine (ICE) vehicles in Malaysia have additional insurance coverage for flood damage, compared with 50% of electric vehicle (EV) users.

General Insurance Association of Malaysia (PIAM) CEO Chua Kim Soon said the findings highlighted a significant gap in flood protection among motorists, particularly as the frequency of extreme weather events and natural disasters continues to increase.

He said EVs recorded an average flood-related loss of RM8,404, compared with RM34,000 for ICE vehicles, attributing the difference partly to EVs’ protected electrical systems, lower exposure and higher adoption of flood coverage among predominantly urban drivers.

“EVs are less prone to flood damages,” he said when presenting the findings today.

Chua also pointed to their protected electrical systems and high-voltage isolation technology as factors that help reduce flood-related risks.

He said Malaysia recorded close to RM1 billion in flood-related losses in 2024, with only a small proportion of the damages covered by insurance.

Across Asia, floods account for more than 50% of natural disaster-related economic losses, amounting to US$31 billion (RM125.816 billion), yet only about 5% of these losses are insured.

Beyond flooding, Chua highlighted landslides and windstorms as significant risks during the monsoon season, adding that Malaysia experiences at least 100 landslide incidents annually.

Between 1961 and 2023, landslides caused RM5 billion in recorded losses in Malaysia and claimed more than 600 lives.

Meanwhile, approximately 26,000 storm-related incidents have been recorded since 2021, resulting in property damage.

He also pointed to regional differences in flood insurance protection, with the southern region recording the highest proportion of fire and motor insurance policies with flood extensions.

East Malaysia remained particularly underinsured, with only 21% of policies carrying such coverage, compared with 29% in the east coast, 28% in the central region and 28% in the northern region.

He stressed that comprehensive motor insurance does not automatically cover flood damage, as motorists must obtain additional flood protection through an extension to their policies.

He also urged homeowners to understand the distinction between houseowner insurance, which protects the building, and householder insurance, which covers household contents.

He warned that many homeowners only insure their buildings because of requirements imposed by banks when taking housing loans.

“Most of those insurances that they have, they didn’t have insurance for the contents. They only have insurance for the building,” he said.

Chua recalled the Putra Heights gas pipeline explosion as an example of how uninsured household belongings could result in substantial financial losses.

On preparedness, he welcomed the Budget 2027 allocation of RM100 million for flood mitigation initiatives, including the construction of retention ponds and river maintenance.

He also encouraged motorists to use their insurers’ digital roadside assistance applications when accidents occur and warned them against signing documents provided by unauthorised towing operators, as this could complicate vehicle repair and insurance claims.