Everything You Need To Know About Car Insurance In Pakistan

Everything You Need To Know About Car Insurance In Pakistan
July 16, 2018 Ahad Mirza
car insurance

An Easy To Use Guide For First Time Buyers

Auto Insurance

Just like we need insurance for our health, insurance for our travel, we need insurance for our cars too. We live in a world where maintenance cost is more expensive than buying a new car and this manipulates the need of insurance. We all like a little extra stash of money in our wallet but it is quite challenging when you have a car or multiple cars which needs to be insured. The outcomes for not having a car insurance are never worth the risk especially in Pakistan where traffic load is increasing day by day, poor road conditions and ‘not so good’ driving habits with a little sense of traffic rules results in accidents on daily basis. Therefore, covering your car with a decent insurance policy is essential but, with a wide variety of eye-glazing policy options in the market, it is difficult to figure out the best car insurance in Pakistan.

Have you invested your hard earned money on a brand new car and now that you are behind the wheel, you are worried about its safety and protection? And given the driving habits in Pakistan, sudden accidents, theft, vandalism, falling of trees are a norm and they do happen, and when such situation arises, insurance is the best fall back cushion that keeps our finances safe and sound.
For making smart decisions one should be smarter by knowing and understanding what he is dealing with. In this blog, my aim is to explain everything you must know about insuring your car, it’s key features and purchasing.

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  1. What Is Car Insurance Policy?
    In simple words car insurance means: “An agreement which is made between you(insured) and insurance company(insurer) that you will pay(premium) to insurance company which in return guarantees that if your vehicle meets an accident and is damaged or destroyed, the insurance company will pay to return it to its original condition, or have it replaced. Similar is the case with physical injuries: The insurer guarantees to pay for the medical aid you need to recover until you return to your original state of health.”

Types Of Policy:

There are three main types of insurance policies:

  1. Third Party Only (TPO)

Third party car insurance covers the damage of someone else’s property or injuries in the event of an accident that was your fault but, it does not provide cover for you or your car or if your car was stolen, damaged or destroyed by fire.

  1. Third Party, Fire, And Theft (TPFT)

Third party, fire, and theft (TPFT) cover provides the same level of protection as third party insurance in addition to that, it also covers your vehicle if it was stolen or damaged by fire.

As with third party only, TPFT insurance won’t cover any damages due to collisions or accidents.

  1. Comprehensive Cover:

Mostly vehicle collisions result in some damage to both vehicles. If you cause a crash your third-party insurance will only cover costs for the driver you hit. If your car is damaged too, you are unlucky unless you have comprehensive collision insurance. This coverage will pay for the damages to your own vehicle if you crash into another car or an object. It also helps you out with damages caused by other unfortunate events (vandalism, theft, fire, natural disasters, etc.).

2.   Ways To Get Cheapest Auto Insurance Possible

 

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Now if you are fully aware of auto insurance policies and its importance, below are some significant things you need to look before choosing the right cover. Finding the premium auto insurance in Pakistan can be very daunting in this era, however, few points can help you find out the best for your needs.

  • Shop Around For The Right Quote:

You will be surprised after reading this, our top tip to get cheap car insurance in Pakistan is to shop around, compare quotes, consider the odds, and then make the right choice. You can save thousands of rupees if you shop around to find a new cover for your vehicle. Premium rates and policies vary between insurance companies. The best idea which is easier, quick and time efficient is to use an online website for comparing quotes and policies and then buy the best deal for your car and your pocket.

Try KarloCompare to find the cheapest car insurance in Pakistan for you. Whether it is day or night, you can choose from a wide variety of products offered by Pakistan’s leading insurance companies.

  • Consider The Right Coverage:

If your car is old and has a low market value then considering 3T(Total loss policy, Theft policy, and Third party policy) cover may be the right choice for you to save some money rather than shelling out on comprehensive cover. Be smart, first find out the value of your car then weight the value against the premium you will pay for the cover then determine it is worth it or not.

  • Look Out For Discounts:

To maximize your savings check out for all the possible discounts provided by insurance companies for customers who:

  • Have a clean driving history.
  • Pay for their insurance annually with one lump sum.
  • Ensure multiple cars.
  • Group together car insurance with other insurance policies for example home insurance and buy from the same insurance company.
  • Boost Your Excess:

Don’t forget to check your voluntary excess carefully which is attached to your policy. This is the amount you pay yourself when you make a claim. Agreeing to pay more voluntary excess in your policy can bring down the price of your insurance policy, so work out with how much you can afford to pay towards the costs in case of an accident and then declare your excess accordingly.

  • Provide Your Vehicle Security:

By making your vehicle more secure, it can attract a discount in your premium. Insurance providers like cars which are parked in garages or on a driveway instead of parking in the streets. Aside from the benefit of not having your car vandalized or stolen, this can cut your premium. So make a move and clear out your garage if it is full of junk!! Also fitting alarms, tracking devices or steering locks in your vehicles can dramatically reduce your premium.

3.    Tips for Lowering Your Car Insurance Rates

These days when a person buys an automobile, auto insurance is the top priority, and frankly speaking, this is how it should be. Since the prices of cars keep increasing every day, the cost of insurance coverage is also on the rise.  Likewise, the renewal of insurance cover also needs an in-depth examination prior to renewing or purchasing fresh car insurance.

Below are some good tips for lowering your car insurance rates:

  • Lowering auto insurance rate is your right; this, however, does not mean you go for a company or an insurance package that compromises the whole idea of having valid and viable car insuranceCar insurance ratesdiffer a great deal from one insurance company to another. A detailed search and window shopping can bring you the expected results. With such data at hand, you are now well equipped to lead smart negotiation thus saving handsome amount each year. Needless to say, your market knowledge on which insurance company is most competitive is paramount
  • If you are buying a new car you must built in the insurance cost, remember this is not a onetime cost. The car insurancepremium needs to be paid each year when the car insurance policy is renewed. It is better to buy a make or a model whose insurance expense you can manage without a break. A relatively inexpensive car will surely have a low insurance rate
  • The car insurance in 2018has risen fairly high. This is mainly due to the increase in the government taxes on spare parts and accessories. The rates for out of market makes and models such as Mercedes, Audi, BMW may be slightly higher to regular makes such as Honda, Toyota or Suzuki, irrespective if the cost is similar or slightly differs. This is because the insurance company feels the repair cost will be significantly higher because of spares and accessories. By choosing the right model you can reduce the insurance rate to a great degree
  • Try to take care of minor repairs due to accidents by yourself instead of asking car insurance company to foot the bill. This way when you renew the car insurance policy you can demand no claim bonus thus lowering the insurance rate quite significantly
  • There are several general insurance companies who would be willing to offer home insurance along with car insurance at highly competitive insurance rates. If you have any plans to buy an insurance cover for your house, office, factory or a shop combine it with your car insurance to avail best possible deal
  • Similarly, if you are a two-car household having one insurance company for both the cars, you can fetch great deals that can help you save decent money and reduce insurance rate.
  • If your car is safely parked inside the house premises, and is chauffeur driven maybe you can exclude the accessories such as an expensive audio system, navigation system, DVD player from the list. This will significantly lower the insurance rate
  • The renewal premium must be paid before the insurance cover lapses. There are two main reason:
  • The car is fully secured and never at risk. In case the car insurance has expired even for a single day you have given an excuse to the insurance company to shy away from settling the insurance claim. You can rest assure that the insurance will not pay even a dime
  • By buying a car insurance before the earlier expires you can demand no claim bonus lowering insurance rate. Supposedly your current car insurance expires in December 2107, you should have renewed your insurance before 2018 begins
  • It is advised to pay full premium in one go. Otherwise likely are the chances you will forget to pay quarterly installments thus making your car vulnerable and perhaps you’ll not receive a good insurance rate.

 

  1. Best insurance companies in Pakistan:

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The demand for car insurance in Pakistan has mushroomed many car insurance companies to offer lucrative deals. The mushroom growth does not mean car insurance companies in Pakistan are unreliable, many of them are trustworthy. The point to be noted is the ease of process and the time a car insurance company takes to settle the claim in case of an accident or stolen vehicle. Out of many standard items you must look while selecting a car insurance company in Pakistan below are the fundamental ones:

  • Quick and convenient process of obtaining an insurance cover
  • Which car insurance in Pakistan has the lowest premium on a given amount, make and model of car
  • Fast and convenient filing process with minimum paperwork
  • What is the maximum time the car insurance company takes in settling the claim either in case of an accident or stolen vehicle
  • Reliable and prompt customer service

Taking above fundamental requirements as a benchmark, out of several car insurance companies in Pakistan below are some of highly reputable and trustworthy car insurance companies who could be on your list while you get best car insurance quotes.

Before you set yourself to acquire best car insurance quotes use comparison websites such as karlocompare.com.pk, be clear in your mind what kind of car insurance are you looking for; “Comprehensive” car insurance or “Third Party” insurance cover. Although many aspects are covered in Comprehensive car insurance but still you may want to add few more clauses. Similarly, Third Party car insurance generally covers property damage, bodily injury and death only. You must also bear in mind that car insurance companies may look similar but their policies may differ slightly. It is up to you to make the final call and compare which car insurance company covers what and what is not off the shelf.

Earlier to get the best car insurance quotes a person had to physically visit or to call upon to the insurance representative. Now this can be done by visiting websites of insurance companies in Pakistan on your laptop or using smart phones. Once you are locked on the car insurance company and have compared the quotes you can now speak to the representative and try to squeeze even better deal.

Apply For Car Insuarnce

A person must realize that the car insurance is Pakistan is growing, so is the competition among them. A little research and investigation can help the customer get the best car insurance quotes. Instead of relying on the car dealer simply spare few moments and go the web and find it out yourself on karlocompare.com.pk.

5.Ways to make sure your car insurance pay for your loss:

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Have you ever had a fight with your car insurance provider for not covering a loss? That usually happens when the insurance policy has not covered a particular loss and you never really gave that much of a thought when you were signing that insurance contract. Comprehensive car insurance covers still leave out quite a few clauses that you may have never considered as important. Once that happens, it means that during a loss, or an accident or theft, you may be left in the lurch by your insurance provider and you would have to bear the cost yourself!

So, when your policy is near expiry, or if you’ve started shopping around for a new car, go through the car insurance policy and make sure the following areas are always covered:

 

 

  • Motor collision with any other vehicle (Government or Private Owned)

If you’ve gone through this clause, read it carefully again. It generally covers injuries and accidents where you and your car are covered. But if you ensure that the Third-Party Clause is added, then damages to someone else’s property can be covered too in case you accidentally bump into someone else’s vehicle.

  • Fire and explosion due to mechanical or electrical fault

Besides collision or an accident, comprehensive insurance also covers damage to car in case of fire caused by mechanical or electrical fault. However, the coverage will seize to exist if the car is carrying explosive or flammable material. Rethink about carrying petrol or kerosene for your generator in your car.

  • Natural calamity including earth quake, flood or lightening

Depending on the owner requirements, destruction of car by natural calamity such as flood, lightening or an earth quake can be included in insurance too. But not all insurance plans cover this clause. If your city or locality has issues related to any of this, make sure this clause is added to the policy. Heavy rains do not equate to floods. Make sure heavy rains are added to the policy or the car or bike that stopped recently during heavy rains this year, will not be paid for by insurance!

  • Theft and or car snatching on gun point

This is an importance clause that must be added in the insurance plan because of law and order situation in our country. In case the car is stolen or snatched at gun point the insurance company is liable to settle the claim as per insurance policy agreement.

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  • Damage due to riot, strike or terrorism

This clause is not mandatory in the auto insurance plan. Most insurance companies will not cover this clause. If you remember the strikes and riots that used to happen a few years ago, a lot of insurance companies got away with not paying for the cars that were looted, or destroyed during these riots. Case in point for the clause not being present in the policy. So, make sure the next time your policy is up for renewal, this clause is added to it.

  • Meeting an accident even when car is parked and the car is not driven

Your car could be bumped by somebody trying to take their car out, while your car is parked next to it. You can ensure that the insurance company pays by having the motor collision added to the insurance policy.

Now that we have understood what auto insurance policy may cover, lets also briefly discuss what area are not covered in the policy, and what are some of the clauses that you may want to have added to it:

  1. Personal belongings, such as laptops, briefcases, handbags, expensive sunglasses, etc. can be covered. Surprised, right? Ever heard of someone’s bag or expensive clothes getting stolen? They all can be covered if you haggle right with your insurance provider.
  2. If a car is chauffeur driven or is driven by any family member instead of the owner, that must be spelled out too while the policy is being drafted. If the car is driven by someone not holding a valid driving license, the insurance company may deny any claim, this will create a huge problem when “claim” is made.
  3. Auto insurance may not cover if the car is rented out for commercial use such as to Careem and Uber. For this, you may require a commercial insurance cover which must be negotiated with the insurance company before purchasing the auto insurance policy.
  4. If the policy lapses by even a single day the auto insurance policy will seize to exist and any claim will be denied by the insurance company. Make sure your payments are made on time.
  5. Any negligence on part of the owner such as; battery check up, engine, brakes, and differential oil change, air and oil filters not documented properly, all can lead to your claim being rejected. Your car needs to be in its top shape.

6.Why Pakistani don’t buy car insurance

If you live in Pakistan and you decide to buy a car on lease, and when the sales representative tells you that you have to buy insurance policy for your car, the typical reaction would be; ‘Oh God! Why me?’

This poses a serious question, why do we have such a negative connotation towards insurance and particularly car insurance.

Now the stats are staggering. Various reports suggest that annually 21 thousand cars are stolen annually which amass a total loss of almost PKR 5 billion. And the money lost in the repairs in case of accidents can’t be estimated.

Very rarely you will find a person who will willingly buy car insurance in Pakistan. Most of the people who have insurance were forced to buy it because they bought it through auto finance.

Let’s consider the various the reason for why Pakistanis are reluctant to buy even basic car insurance.

Lack of Law Enforcement:

In the developed world, insurance is engraved in their culture. There is no concept of business without insurance in the western world. If you are not insured you will get penalized for it.

In Pakistan, the laws are not clear about it. Although according to the Motor Vehicle Act 1965, it is compulsory for the car owner to have car insurance. But nobody bothers to buy it because the police never ask about it. If I knew that I will be asked about insurance I might seriously think about having one.

Bad Reputation of the Insurance Companies:

There is a general word around that Insurance companies are not there when you need them. People think that if their car is stolen or they meet an unfortunate accident the insurance company will take months to reimburse their claim. Or worse reject it outright.

There may be some truth to it but most of it is exaggerated. There is a fierce competition among the insurance companies and none of them can afford a bad reputation in the market. Especially in the world of social media where one tweet can make or break a company they will definitely treat their customer fairly.

Sometimes people also play some tricks to con money out from the insurance company by using tricks which put the companies in a difficult situation.

Popularity of Used Car:

Pakistani market is obsessed with used car. If you do a quick market survey or an online search you will find a plethora of used car being bought and sold.

Now if you buy a used car and the previous owner had the insurance, that insurance will be null and void. You would have to buy new car insurance.

Now the car insurance company will calculate the depreciation on it based on how old the car is and will tell you the percentage of the cost of the parts that they will cover in case of accidents.

Now if the car is six years old, the depreciation will be 60% which means the owner has to bear 60% of the cost of the parts he buys, or being replaced. To most people this is not a lucrative deal and won’t consider buying an insurance policy. Depreciation is capped by most insurance companies at 60%, ie. 10% per year up till a 6 year or older vehicle.

The Religious Factor:

This is a sensitive issue that needs consideration. Like the traditional banking, the conventional ways of insurance are considered a form interest. And how pervasive religion is in our society, this is major factor of the unpopularity of Car insurance.

Although, Takaful is emerging as an alternative option but it has a lot to catching up to do.

Lack of Safety Culture:

Have you ever noticed a plumber hanging on to the wall without any safety while fixing a pipe? Or the reckless driving we all suffer from and, quite frankly, are guilty of.  This shows that we are a nation that does not value safety.

And car insurance is basically a safety tool, a sort of a risk management to ensure the safety of your car and yourself. But if you have grown up in a culture that undermines safety, spending money on it will seem like a waste of money.

Registration of FIR:

This again is related to law enforcement. If your car gets stolen, the insurance requires you to lodge an FIR of the offence. Again, this simple procedure of the law can become a complete hassle for a common citizen. Not every officer of the law is corrupt but the perception of the police that a common man has is overwhelming.

This may not be a fundamental reason for not buying the car insurance but certainly contributes in the decision of not buying one. The fact is; registering a fir is never an easy thing to do in Pakistan and at times you need to try your nerves or give some bribe for a simple fir. This is pretty unfortunate and we are forced to live in a society where people, who are meant to protect and help us goes even against the basic rights of common people. Don’t be a statistic, and get auto insurance for your vehicle whether it is new or old!

 

Karlo compare car insurance calculator Pakistan is the foremost way to compare and find the best insurance companies of Pakistan. If you have your budget and needs in your mind then finding the best car insurance is no big deal. A bit of digging and a comprehensive research is very important before considering any insurance company best for you. The theft and traffic incidents in Pakistan are on a constant rise and this is the time, when people finally have to admit that auto insurance is must for them. Saving few dollars and risking your new and used cars is not a wise thing to do and no matter how careful you are, the chances of accidents and unfortunate incidents are always high. Look out for the best car insurance offers!