Always look for insurance companies that provide "agreed value" instead of "market value". Pro tip, most insurers in Malaysia don't mention anything about this so the coverage provided is based on market value. So say you insure your car for RM50k, paid the premium for that RM50k value, but when claim the insurer will say "Oh, the market value is only RM40k, you over insure your car. Thanks for paying the extra premium to me for free but I will only pay you max RM40k coz that is how much your car is worth.

You will lose if it goes to court because those are the terms of the contract between you and the insurance company. Read the policy and it will be stated there but of course no one reads the policy wording.
This thing has been there all the while. Under-insured and over-insured is a thing. If you under-insure, it will be considered that you are self-insuring a portion of the value so you get only part of the value. If you over-insure, then too bad, you rugi for paying higher premium without getting any benefit. This sounded ridiculous to me the first time I heard this 2 decades ago. Take note that insurance business is regulated under BNM, so this is an approved practice, not suka-suka do one.

If agreed value then they will pay you the value that you paid the premium for. No market value bullshit. So make sure to always look for this.

There is one developed country with the biggest economy in the world where shit like this happen all the time in their insurance, health, automotive sectors. And courts in those country are run by elected judges. Yes, the judges raise campaign funds and run for office. So you may want to temper your developed country rhetoric.