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VELOX AUTO VENTURES
VELOX AUTO VENTURES
Automotive Asset Recovery

Resources & Insights

  • Industry updates, compliance guides, and operational insights for industry players.
1. Understanding Total Loss in Malaysia: BER vs ATL

Total loss in Malaysia falls into two official categories, but most consumers are unaware of the difference:

BER – Beyond Economical Repair (Wreck)

  • Occurs when repair cost exceeds insurer’s threshold (typically 65–75%).
  • Vehicle is repairable but uneconomical under insurance policy rules.
  • BER vehicles can be repaired, subject to compliance guidelines. For specific requirements that insurers, takaful operators, and workshops must follow, refer to the official Insurers and Takaful Operators-Repairers Code of Conduct issued by Bank Negara Malaysia.
  • Eligible for ownership transfer, inspection, and reinsurance after meeting safety conditions.

ATL – Actual Total Loss (Scrap / End-of-Life)

               

⚠️Why this matters:
Most disputes, buyer complaints, and workshop issues come from misunderstanding which category the vehicle falls under.  
2. Who Is Regulated Under Total-Loss, Disposal & Compliance Rules

Many parties touch a total-loss vehicle and each has compliance responsibilities:

Regulated Parties:

  • Insurance companies – classification (BER/ATL), salvage management, documentation, and reporting the status to JPJ within five working days of claim acceptance.
  • Financial institutions – loan closure processes, releasing the e-Hak Milik (vehicle ownership claim) to facilitate ownership transfer or deregistration.
  • Repairers & workshops (authorized + independent) – adherence to repair standards, providing safety documentation, and ensuring PUSPAKOM inspection for BER vehicles. They must comply with the Insurers and Takaful Operators-Repairers Code of Conduct and follow the base regulations for total loss as outlined in the BNM Claims Settlement Practices Policy Document.
  • Used-car dealers – fair disclosure to buyers (e.g., that a vehicle was previously BER), conducting eligibility checks, and ensuring proper transfer of ownership.
  • End buyers –assuming responsibility for ensuring the vehicle is roadworthy and passes the necessary post-repair inspection by PUSPAKOM before use.
  • Scrap yards & recyclers – environmental compliance and traceability (specifically for Authorised Automotive Treatment Facilities (AATF) licensed by the DOE).
  • Exporters – adherence to customs requirements and providing accurate vehicle-condition declarations.

⚠️ Why this matters:
Most compliance problems happen when one party ignores their obligation, causing the buyer to suffer later (insurance rejection, JPJ rejection, bank rejection).

3. Roadworthiness of BER Vehicles — Repair Rules & Transfer Guidelines

BER does not automatically mean the car is unroadworthy . However, it must meet the following requirements before it can legally return to the road:

Key Roadworthiness Requirements

  • Structural repairs must follow OEM or industry-accepted safety standards. Workshops must adhere to guidance in the Insurers and Takaful Operators-Repairers Code of Conduct.
  • ADAS calibration if safety systems were affected.
  • Engine, chassis & safety systems must be intact and functioning.
  • Mandatory PUSPAKOM inspection for ownership transfer. The specific inspection required for a previously total-loss vehicle is detailed in the PUSPAKOM Notice on BER Vehicle Inspection
  • Insurance documentation to reflect B2-Code 85, B5, or VR1 status (these codes are internal markers used by insurers and JPJ during the transfer process).

Scrap Vehicles (ATL) Must Follow

  • Proper dismantlingunder environmental guidelines set by the Department of Environment (DOE).
  • Disposal record keeping and traceability must be maintained by all parties involved.
  • Ideally processed at an AATF-compliant facility (licensed by the DOE). You can view the List of Authorised Automotive Treatment Facilities (AATF) on the DOE website.

What if no AATF facility is nearby?

⚠️ Why this matters:
Buyers often face trouble because sellers repair BER units poorly or skip compliance steps, leading to issues with insurance eligibility or JPJ re-registration later on. 

4. Renewing Insurance for BER Vehicles — What Buyers Need to Know

Most BER vehicles CAN renew insurance once the owner ensures full compliance with PUSPAKOM and JPJ requirements and submits all necessary documentation to their chosen insurer. For a full guide on the process, you can refer to resources from the official Jom Level Up consumer education.


Key Documents

To secure insurance renewal, you typically need to provide the following reports and documents:
  • B2 – (Code 85) PUSPAKOM Report (Specific inspection for total loss vehicles before ownership transfer/re-insurance)
  • B5 PUSPAKOM Report (Vehicle ownership transfer inspection)
  • VR1 PUSPAKOM Report (Inspection confirmation document)
  • Repair invoices (Often requested to prove professional repair standards as per the Insurers and Takaful Operators-Repairers Code of Conduct)
  • Photo documentation (Before and After Repairing)
  • Tender Award Letter (MERIMEN or auction houses, proving legal ownership of the salvage)

Reasons Insurers Reject Renewal
Insurers apply strict underwriting criteria. Common reasons for rejection include:
  • Poor or unsafe repair quality (failing the physical inspection)
  • Missing required inspection reports (B2, B5, VR1)
  • Discrepancy in chassis or engine records (VIN switching, non-original parts)
  • Unreported modifications that affect safety or value
  • Internal blacklist due to previous fraud, theft, or misuse

⚠️ Important: 

Rejection doesn’t always mean the car is unsafe — often it's missing paperwork or a failure to follow the mandatory compliance trail set by BNM and JPJ.


5. Why Financial Institutions Reject BER Vehicles — And How It’s Resolved

Financial institutions may reject loan applications for vehicles classified as Beyond Economic Repair (BER) following an insurance claim. This is typically driven by system-level risk controls, not an outright prohibition on financing such vehicles. In most cases, rejections can be resolved when the correct documentation and verification are provided.


Common Reasons for Rejection:
Banks often apply conservative screening when a vehicle carries a “Total Loss” history in their backend systems. Key reasons include:

  • System flagging of “Total Loss” events
    Most banking systems do not distinguish between BER and Actual Total Loss (ATL) at the initial screening stage.

  • Structural and safety concerns
    Banks must ensure that repaired vehicles meet roadworthiness and safety standards.

  • Depreciation and resale risk
    Vehicles with major insurance claims carry higher valuation and exit-risk uncertainty.

  • Incomplete or unclear repair documentation
    Without verifiable records, banks are unable to properly assess repair quality.

  • Fraud-prevention triggers
    Insurance claim histories may activate enhanced due diligence requirements.


    • How Bank Rejections Are Typically Resolved:
    Bank rejections are not final decisions. Resolution depends on transparency and documentation.

  • Completion of e-Hak Milik Release
    Any prior loan must be fully settled and released by the insurer or previous owner to clear lien records and enable JPJ ownership transfer.

  • Submission of Mandatory Inspection Reports (B2 / B5 / VR1)
    PUSPAKOM inspection reports are required to verify structural integrity and roadworthiness, in line with official BER inspection guidelines.

  • Comprehensive Repair Documentation
    Before-and-after photos, invoices, and repair records help demonstrate compliance with professional repair standards, including those outlined in the Insurers and Takaful Operators–Repairers Code of Conduct.

  • Request for Manual Review
    A complete documentation set allows bank officers to conduct a more informed assessment beyond automated screening, subject to the institution’s internal credit and risk policies.

    • 🛑 Disclaimer: Navigating Official Classifications and Financial Realities

    "While the terms Beyond Economic Repair (BER) and Actual Total Loss (ATL) are official classifications defined by Bank Negara Malaysia and JPJ, financial institutions are not explicitly required under current lending policies to differentiate between the two during initial system screening. As a result, a generic “Total Loss” flag typically triggers enhanced due diligence regardless of repair outcome. This does not imply rejection, but rather a requirement for additional verification.

    ⚠️ Reality: 
    Banks are cautious, not unreasonable. The primary concern is ensuring that the vehicle is roadworthy, insurable, proper repaired and suitable as a secured asset. With clear documentation and verified compliance, financing approval is often achievable.
    6. The Future of BER & Scrap in Malaysia — Will We Follow Singapore & Japan?

    Malaysia’s approach to End-of-Life Vehicles (ELVs) and Beyond Economic Repair (BER) units is currently evolving. While rules for handling claims are clear under the BNM Claims Settlement Practices Policy Document, the environmental disposal aspect is shifting towards greater regulation driven by the National Automotive Policy 2020 (NAP 2020).

    The Global Shift: Japan & Singapore Models
    Countries like Japan have established comprehensive ELV recycling laws that enforce producer responsibility and ensure hazardous materials are handled correctly. Singapore’s system, driven by its Certificate of Entitlement (COE) model, mandates the deregistration and proper disposal of older vehicles.

    Malaysian Regulations & The DOE Push
    Malaysia is moving in a similar direction, driven by environmental concerns and long-term sustainability goals managed by bodies like the Malaysian Green Technology and Climate Change Corporation (MGTC).
    The government recognizes the need for sustainable disposal methods, as highlighted by the Licensed Automotive Treatment Facility (AATF) Pilot Project.
    The Malaysia Automotive, Robotics and IoT Institute (MARii) is actively promoting AATFs and aims to have 21 facilities by 2030 to manage used parts and components from ELVs responsibly, complying with MS 2697standards for a circular economy approach.
    Consumers and businesses can find the current list of approved disposers via the List of Authorised Automotive Treatment Facilities (AATF) on the DOE website.

    The BER Future?
    It is likely that as regulations tighten, the ambiguity surrounding the "repair vs. scrap" decision will lessen. While the 65-75% BER threshold set by insurers may remain for claim purposes, future legislation might mandate stricter disposal processes, making the current "open-market practices" of unauthorized scrap yards obsolete.

    ⚠️Why it Matters:

    The trajectory indicates a future with clearer rules, better environmental outcomes, and enhanced consumer safety. Industry players like Velox Auto Ventures are preparing for a more structured, transparent ecosystem in Malaysia.

    Your Partner in Automotive Asset Management.