What is Motor Takaful

Motor Takaful is a takaful plan that is designed to offer coverage against the loss or damage of your vehicle caused by reasons such as an accident, theft, fire, etc. It offers coverage for the vehicle’s driver, passengers, pillion riders, third party bodily injury/death, and third-party property loss/damage. Motor Takaful is mandatory for vehicle owners in Malaysia. Also, the Road Transport Act of 1987 has mandated the need to provide coverage against third-party risks in Malaysia. Not adhering to the mandate is considered an offence. Vehicle owners also need Motor Takaful to purchase or renew their road tax.  

Liberalization of Motor Takaful

Before the liberalization of Motor Takaful, the participants of a Motor Takaful plan had to contribute in accordance with a Motor tariff that had a fixed contribution. After the introduction of the liberalization of the Motor and Fire Tariff in 2016, individual participants and takaful operators had the freedom to determine their own contributions instead of agreeing to the fixed contribution cost (Motor Tariff).

Difference Between Motor Takaful vs Motor Insurance

Check out the differences to know more:


  • Motor Takaful: Participants can select a Motor Takaful plan and subscribe to it by offering their contributions (Tabarru’) and signing the contract (Aqad). The contributed funds will be pooled into a pool fund managed by a Takaful operator. So, if any member faces an untoward situation such as an accident, he/she will be offered financial coverage from the contributions given by all the members of the plan.
  • Motor Insurance: An individual can buy a motor insurance plan by paying and repaying the premium on a yearly basis. There is no group participation required in a motor insurance plan. Any untoward situation will be insured by the insurance company.


  • Motor Takaful: If a participant of a Motor Takaful plan does not make any claim, he/she will be possible to receive the distributable underwriting surplus.
  • Motor Insurance: If an individual does not make any claim, he/she will not receive any portion from their premiums.  

Elements of Haram (Impermissible)

  • Motor Takaful: These plans are Shariah-compliant, and they do not have elements that considered as Haram in Islam. So, all the plans are free from the elements of Al-gharar, Al-maisir, and Riba.
  • Motor Insurance: Motor insurance companies do not adhere to Shariah laws and hence might have elements of Interest (Riba), gambling (Al-maisir), and uncertainty (Al-gharar).

Investment of Funds

  • Motor Takaful: Contributed funds from the participants are invested only in Shariah-compliant businesses and activities.
  • Motor Insurance: Conventional motor insurance providers can invest funds in any investments and are not limited to only businesses that follow Shariah ideals.


  • Motor Takaful: Surplus from the invested funds is shared amongst participants and Takaful operators.
  • Motor Insurance: Profit from the funds may only be earned for the benefits of the insurance companies.


There are several Motor Takaful providers that offer comprehensive plans. You may check out the best Motor Takaful plans in Malaysia, compare them, and then select the one aligning to your needs. You can subscribe to one even if you are a non-Muslim as Takaful is for all.