Car Insurance in Pakistan: An Easy to Use Guide for First Time Buyers

Smartchoice Editorial
June 16, 2017

Did you know? according to the survey, only 25% of Pakistanis have their cars insured (source), which is primarily because they are bank financed and insurance is mandatory for such cars. The number could go further low if insurance wasn’t mandatory for the financed cars.

Only 25% of Pakistanis have their cars insured

Basically, car insurance is an agreement that protects you from any financial loss if you have a sudden accident. It is a proper understanding on paper under the laws in which you agree to pay the company a fixed amount every month and in return the company bears any losses that your vehicle comes across in the time period decided. Most of the times, these insurances even include the loss due to theft.

A more advanced form of these insurances cover the medical cost of injuries or deaths caused. Though obviously, the more the allowance, the more and the higher the installments.

Why is Car Insurance Important?

car insurance damage

Having car insurance in Pakistan now is a necessity due to heavy traffic and increased risk of accidents. However, in certain countries, it might be up to you if you want to opt for it or not whereas in others, it is a compulsion by the court to have your vehicle insured or else you are heavy fined and your license is ceased.

  • You might be next!

You might think that the probability of having an accident is low and even if it is, you might as well have some cash in hand to repair that car of yours. But the one thing that you are overlooking here is the payment you have to do for the other’s loss! It’s not just his car dents that you have to pay for now, rather any medical harm too, and believe me, that costs a fortune (depending on the car’s make and the person’s health).

  • It can cost you as much as a property would

So yes, the chances of an accident are not very high but if you get into one, it will ruin your finances as well as your credibility as a driver. Not only this, but if you cause any property damage, be it personal or government owned, you are held responsible and need to fix it, which might cost a lot. So beware, this small word accident can cause great damage to you, which is why it’s better to be safe than sorry.

  • Who will cover your medical if you were hit?

Now let’s look at this the other way round, what if you were the one who got hit? What if the person who hit you does not have insurance? And what if even after you sue him, he has no money to pay you? Well in this case again, your car insurance coverage comes to the rescue! It will cover all your medical costs of the accident you faced which can be very severe or a slight one.

  • Repairing and maintenance hassle

Certain insurances also allows car repairs and replacements which otherwise are a compulsion on your pocket, and these small repairs might seem small to you, but remember, they happen often and are more likely eating up your money bit by bit.

However some international car brands have repair parts that need to be imported or their maintenance’ cost is very high, so that is where the insurance comes in handy. So this amazing cover that the auto insurance offers you, saves your pocket money keeping your car as good as new.

However some international car brands have repair parts that need to be imported or their maintenance’ cost is very high, so that is where the insurance comes in handy. So this amazing cover that the auto insurance offers you, saves your pocket money keeping your car as good as new.

  • Theft!

One most important factor that we have not yet discussed is theft! This is one thing that is rising day by day in Pakistan. If not the whole car theft then different parts like side mirrors, tapes etc are a norm now. Every other day you get to hear your relatives or friends saying that it got stolen. These kind of unplanned spending are very annoying specially when it’s not your fault and you couldn’t have done anything to avoid it. But here you are with an option that will get your mind free off these thefts and that is car insurance! Though not all car insurance coverage has this, so make sure to add this while talking to car insurance companies.

How to Optimize your Car Insurance Search with this Guide

car insurance guide

Having a good guide to refer to before buying anything is an essential aspect of the buying process. It makes you highlight and think about what is more important and what should be really invested time upon. Try to have a simple guide that is self-explanatory and does not restrict you with a few options. This car insurance buying guide not only help you figure out what to select but also aim towards clarifying all the terms and conditions and shed light on both the pros and cons of any given situation.

However, the final decision is yours. Guides are just a brief summary as to what you want and what you should do for it. Basically they are the first step towards the right decision so be very vigilant while choosing one. Though here are a few technical words used by insurance companies that you should know of:

Third party liabilities: this refers to the damage caused by your actions to a third party that was not involved.

Car insurance Premium cover: this refers to the amount paid by the insured to the insurer to cover up his risk.

Threshold: a cutoff point, if met allows the injured person to file a lawsuit against the driver.

Actual cash value: Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence

Adjustable rate: An interest rate that changes, based on changes in a published market-rate index.

Aggregate limit: Usually refers to liability insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents might occur.

Capitalization or leverage: Measures the exposure of a company’s surplus to various operating and financial practices. A highly leveraged, or poorly capitalized, company can show a high return on surplus, but might be exposed to a high risk of instability.

Car insurance Claim: A demand made by the insured, or the insured’s beneficiary, for payment of the benefits as provided by the policy.

This car insurance buying guide not only help you figure out what to select but also aim towards clarifying all the terms and conditions and shed light on both the pros and cons of any given situation.

Guide to Buying Car Insurance in Pakistan

Car insurances can be of many different types offering numerous options under their terms and conditions. It lies on you which one you pick keeping all circumstances in mind.Basically there are two types:

1. Third party insurance

Usually covers the basics of not only the car and yourself, but also the damage done to the third party.

2. Comprehensive insurance

These cover everything that you can think of. Be it accidents or thefts or even death.

However the best kind of car insurance here in Pakistan is a comprehensive insurance which covers every aspect of spending that you can think of on your vehicle, be it maintenance, repair, accident or thefts.

Here are a few points that you need to consider before deciding to buy an auto insurance:

1. What exactly do you need it for

First of all when you talk about insurances, you have to check what is the minimum insurance required that is set by the government.

Second is the step which varies from person to person and their circumstances. You buy insurances to have a piece of mind, so that you are not always thinking of saving up for the worst. So if your insurance does not offer you that peace, then it’s not the right pick for you. Some people are very cautious about everything and want themselves to be prepared for the worst, whereas some just need a basic coverage and they are fine. Not only this, but certain jobs have a higher risk of accidents or some places have a higher chance of your vehicle getting stolen or any other mishap, thus getting a good fully covered insurance is inevitable if you want to play it safe. So the happenings in your surrounding play a great role in making this decision.

Some people are very cautious about everything and want themselves to be prepared for the worst, whereas some just need a basic coverage and they are fine. Not only this, but certain jobs have a higher risk of accidents or some places have a higher chance of your vehicle getting stolen or any other mishap, thus getting a good fully covered insurance is inevitable if you want to play it safe. So the happenings in your surrounding play a great role in making this decision.

Thirdly, you need to weigh out the margin advantage. By this we mean that you have to closely study the costings. Is your car really worth that much of coverage? Let’s say the amount that you are paying to the insurance company over a span of 30 years actually exceeds the cost of the vehicle itself, then obviously it is not a vise option to go for it.

2. Check the insurances that you have already (if any)

Check for all the clauses and discuss with the insurance company if they can be amended as per your new needs. Though if you are going for a new car insurance, then research all the policies beforehand and then go to the company to further discuss. Selecting a new car insurance requires a lot of thorough research and don’t forget to talk to their clients for reviews, that speaks volumes!

3. Check your records

You might think a small speeding ticket won’t do you much bad but believe me, these tickets are what make up your repo in front of the company and that is directly linked to prices. So make sure your record is clear or if you have any tickets on you, clear them off before visiting the insurance company.

The insurance company is actually looking for such reasons to take the price up and they will for sure utilize this ticket opportunity in their favor and you can’t even negate it as its as per law. So be very careful, go with a clean perfect record and leave no loopholes on your end. Also check for your dealing with all used car insurances, because the new ones will definitely search for that.

4. Do your homework!

This refers to comparing costs or you can term it as bargain! Research other companies, tell them your details and get a quote. You can also easily search and compare quotes on smartchoice.pk

Usually an amateur person going to an insurance company for the first time is fooled because of his lack of knowledge. So it’s good to know what’s happening in the insurance world and it’s even better to sound confident when you go for the dealing with the car insurance rates.

This is a subtle way to bargain at such big levels, where you quote what you got from others to bring the cost down and negotiate on the conditions with car insurance companies in pakistan. Use the online car insurance calculator to help you get an idea.

5. Search for discounts

Almost every company offers discounts on one thing or the other like a good record or your profession. Search them well for more than one companies. Nowadays internet not only shares the company’s point of view but also the comments of people, so watch them closely to find out how others got their way through, that might help you with your process. You never know that the insurance that was out of your range might be very cheap with such promotions.

6. Verify the company

As important as it is for the company to track your record, so is it for you to track theirs. Ask people who have been their clients, search the net or simply ask the representative for how many clients do they have and further such stats.

Again, search the net, you don’t only have to search for the company’s point of view but also the comments of the customers as they speak the truth. Especially the negative comments as they will tell you a lot about the company’s approach and dealing towards situations that are to an extreme. You can always question the representative about it later.

7. Crosscheck with your resources

This is very important. Usually we sign up for things in excitement and then realize we can’t manage it. Know the stability of your job and pay and check if you can manage to take out that insurance amount every month from your pay. Prioritize stuff in a very realistic manner.

You can also use car insurance calculators online to help you. This helps you plan the budget pay and the advantage that you are getting. Search for car insurance rates prior to plan everything.

8. Revise thoroughly

Many a time we get to hear fraud cases as to how companies played with words and deceived the client. So make sure you re-read it several times and assess minutely what is written. It is perfectly fine to ask the representative a thousand times if you don’t understand anything. After all, it is for your own ease that you are doing this. Take your time, there is no hurry, but make sure you are okay with every single policy before you sign. You can even take an advice from someone who knows this or get someone in your family go through it for you.

9. Have proof to everything

Be it starting a deal or making amendments or canceling the previous insurances, ALWAYS have a proof. And by proof, we don’t mean a third person or a verbal confirmation, rather ink it down, have signatures and have a copy with you always!

This is more of a precautionary way but it’s good to be safe to avoid any hassle in the future.

10. Negotiate and try to customize it to the best possible need

Talk to the representative, be sure of what you want in respect to your vehicle and its use. Read all the other packages they offer, pick and choose the policies you like best and try to customize a package which suits you best. This is an option that can happen if you try.

Bonus: Car Insurance Claim Process

car insurance claim process survey

Having car insurance in Pakistan is very important because of the broken roads and lack of traffic education in people. But car insurance claiming one is not that easy. When we experience an accident, we are not in our senses and often forget what to do which makes up end in a situation where we can’t claim our insurance. So here a few things to keep in mind when you get into any such situation.

  1. First of all, always have your cnic and insurance number with you.
  2. Right after the accident, call your company and explain what happened, they might ask you for these numbers so be prepared.
  3. Next, remember to file an FIR and take pictures of the accident for proof if needed in the future.
  4. You can even ask for a tow service from your insurance company if needed.
  5. After you have completed all these formalities, it is now on the company to get the paperwork done, though you can always call and check for updates.

6 Prominent Car Insurance Companies in Pakistan you Would Want to Compare

1. Adamjee Insurance

Adamjee Insurance One of the most used car insurances in Pakistan is adamjee insurance which offers a comprehensive insurance against everything including theft. Following is the list of things they cover directly from their official website:

Loss or damage due to:

  • Accidental means, Fire external explosion, Self – ignition
  • Lightning, Flood
  • Theft & Burglary
  • Malicious Act
  • Whilst in transit (Road & Rail)
  • Terrorism, Riots & Strikes (Optional)

Third party liability

  • Property Damage
  • Bodily Injury
  • Death

Value Added Services

  • Call Center 24/7 with Toll Free Number 0800-00242
  • Tracker at Insurance Company Cost (Optional)
  • Adamjee Catch Card (Optional)

Some Exclusions

  • Losses incurred outside geographical area of Pakistan
  • Consequential loss depreciation wear and tear
  • Mechanical or electrical breakdown failures or breakage
  • Damage to Tyres and Battery unless the Motor Car is damaged at the same time where the liability of the company is limited to 50% of the cost of the replacement

More on Adamjee car insurance

2. EFU General

This company provides a full range of non-life insurance for almost everything. Be it your car or any other property. Following are the things they provide:

  • Coverage
  • Act liability policy
  • Third party policy
  • Comprehensive policy
  • Third party personal injury and death
  • Third party property damage
  • Theft/own damage, constructive total Loss

3. IGI Insurance

IGIIGI insurance offers premium insurances since 1992. Being part of the Packages Group, IGI is the largest insurance company by market capitalization.IGI Auto Cover is a complete auto insurance plan for both individuals and corporate offering covering your automobile against the risk of Accidental damage Fire, external self ignition or lightning or frost burglary, housebreaking, or theft Malicious act riot & strike, flood, hail, wind, hurricane, cyclone, tornado or typhoon earthquake, volcanic eruption or other convulsion of nature whilst in transit by air, road, rail, inland waterway, lift or elevator, third party legal liability terrorism.

More on IGI car insurance

4. TPL Direct Insurance

TPL Direct Insurance’s Auto Direct ensures the best value for your money through a Comprehensive Insurance Cover and 3T (Theft, Third Party and Tracker) cover. It also offers:

  • Fastest Claim Settlement
  • Unparalleled Value Added Provisions
  • Available 24×7 through our call centre and the Yodelee Mobile App

5. Jubilee General Insurance

Jubilee InsuranceJubilee insurance is known in Pakistan to be used by large corporate groups as well as individuals. It offers:

  • Motor insurance renewal
  • Old car comprehensive
  • Private car comprehensive
  • Theft , third party and total loss coverage

More on Jubilee car insurance

6. Askari Car Insurance

Askari General InsuranceThis company offers:

  • Commercial vehicle insurance
  • Private comprehensive
  • Motorcycle insurance

This offers a commercial vehicle insurance protecting you against damages, theft and third part liabilities.

More on Askari car insurance

Conclusion

car insurance certificate

No matter how much you think your car is safe or no matter how much you underestimate its worth, always know that accidents are inevitable, at one point in time you will face something of the sort. Especially living in Pakistan can sometimes prove to be a bit unexpected. So either make sure you are fully prepared to bear that financial burden and that tension 24/7 365 or free your mind by buying a car insurance which not only makes your vehicle safe but also your medical cost from those accidents that you might face any day. It’s a wise habit to plan before hand to have a more smooth future.

Do a thorough research, compare all policies, play smart and don’t forget to customize our insurance policies, as once done right, you will be grateful for the rest of your life!

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